The Complete Guide to Selling Your Website Business for Maximum Value

In many cases, half of the value you derive from your website is realized when you sell it. However, successfully selling your business doesn’t happen by mistake, so don’t wait until the last minute to create an effective strategy. Instead, spend some time now to establish a clear roadmap for your life-changing exit. 

In this article, we discuss:

• How to determine the value of your website business
• What steps you should take to prepare for a successful exit
• Where you should consider selling your website business
• How long it generally takes to sell your website business

Related Article: A Step-by-Step Guide to Buying or Selling Websites

How Much Can You Sell Your Website Business for?

Many content site or website owners wonder, “How much can you sell your business for?” It’s a good question, and one that should be answered early on in the exit process. Understanding how much your website is worth, and how its value is calculated, will help you plan ahead for a profitable sale. 

Business value explained

The most common method for calculating the value of a website is the seller’s discretionary earnings (SDE) multiple method. According to the SDE multiple method, value is equal to the SDE times a multiple number. In other words:

Website value = SDE x the multiple

While this may seem straightforward on the surface, accurately calculating the value of your business is a nuanced process. For starters, you must create an accurate SDE calculation. 

SDE

SDE is the profit or income your company generates before taking into account certain discretionary expenses. These include:

• Your salary
• Noncash expenses
• Interest
• One-time investments
• Unrelated income or costs
• Taxes

In essence, SDE describes the true money-generating capacity of your business. As such, it is a more useful figure for comparing the performance of two or more businesses than income alone. 

For example, let’s say there are two similar website businesses, company A and company B. Both have a net profit of $100,000. Company A, however, must pay $10,000 per year in interest on a Small Business Administration loan, while company B doesn’t need to pay any interest. 

When this discretionary expense (interest) is added back to the income, it is clear that company A generates more overall value for the business owner. That is why SDE is also called “owner’s benefit.” 

When calculating SDE, it is extremely important to add back all appropriate discretionary expenses. Failing to do so undervalues your business and sets you up for getting less than you deserve when you sell it. On the other hand, if you overvalue your business by adding back non-allowable expenses, astute prospective buyers will likely call you out. 

Given the importance of creating an accurate SDE figure, many entrepreneurs find it helpful to work with a business Advisor throughout the valuation process. 

The Four Pillars of Value

The second part of the value equation is the multiple. In simple terms, the multiple is a number that captures tangible and intangible aspects of a business’s value. As you can imagine, there could be two website businesses with identical SDE figures that have quite different overall values. 

For example, if one business is growing rapidly and one is declining, which do you think would be a better buy? Or, if one website has poor financial records and disorganized or nonexistent documentation, it would be less attractive to prospective buyers than an identical business that has impeccable documentation. 

While there are many factors that impact value, they can largely be grouped into four categories. These categories are often called the Four Pillars of Value. They include:

• Growth
• Risk 
• Documentation
• Transferability

“In simple terms, the multiple is a number that captures tangible and intangible aspects of a business’s value.”

Growth

The expected future performance of a company weighs heavily in the valuation process. One of the strongest indicators of future performance is the past and current growth trends of the business. If a company has grown steadily and consistently over the past several years, a prospective buyer can feel confident that it will continue to grow after they take over ownership. 

For this reason, strong past and current growth leads to a higher sales price, and this is captured by the multiple. A knowledgeable buyer will also look at whether the business has any areas that are primed for potential growth. 

Lastly, they will also take into consideration the growth trends of the website’s niche as well as the overall economy. If the website’s niche is in decline or the economy is headed for recession, it could weigh negatively on the value of the website. 

“One of the strongest indicators of future performance is the past and current growth trends of the business.”

Risk

All business endeavors entail some level of risk. You wouldn’t be in the position you are as an entrepreneur if you couldn’t tolerate some risk. However, the more risk a business carries, the less valuable it will be considered by prospective buyers. 

Risk comes in many forms. As a general rule, if any part of your company’s success relies on a single point of failure, it will carry more risk. That is why diversifying your business operations is crucial. 

Your business may also carry legal risks. Company patents, copyrights, and trademarks can all be targeted by competitors. In addition, prospective buyers will want to know whether your company is likely to be sued at any point in the future. 

Documentation

A company that has organized documentation will be more attractive to prospective buyers than one that does not. Documentation includes financial statements, standard operating procedures, vendor or supplier agreements, and other relevant business information. 

Documentation makes it easier for a potential buyer to understand how your business operates and verify its performance. Clear documentation practices also demonstrate that you run a professional operation, instilling confidence in the buyer. 

Transferability

Not all businesses are easily transferable to a new owner. The more easily your business can be transferred without negatively impacting its performance, the more valuable it will be. 

Transferability can be hampered if your website business is tied to your personality, likeness, or image. For example, if you run a dog training website that primarily focuses on your ability to successfully train badly behaved pups, a new owner may find it hard to step into your shoes. 

Additionally, If your business operations rely on your knowledge to continue smoothly, a new owner will find it hard to duplicate your success. The more you can document operations and automate processes, the more transferable your business becomes. 

“You wouldn’t be in the position you are as an entrepreneur if you couldn’t tolerate some risk.”

How to Prepare Your Website Business for Sale

Adequately preparing your website business for sale could make the difference between a hugely profitable exit and a mediocre sale. This difference could send you down two drastically different financial paths as you move into your post-sale life and career. 

Given the importance of getting your exit right, it is crucial to take some time to learn how you can plan ahead to create a truly successful sale. 

Determine your goals

In order to create a successful exit strategy, you must first know what you are working toward achieving. If you have not done so already, take some time to get clear on what your goals are in relation to selling your online business. 

How much do you want to sell your website business for? What are the deal terms that are optimal for you? When do you want to sell? What will you do with your money and time after you sell your company? These are just some of the questions that you will want to ask yourself before embarking on the selling process.

When setting your goals, don’t be afraid to go big, but make sure you remain realistic. At the same time, keep an eye on what you will actually need to do in order to achieve your goals. If your goal is to double the value of your business before selling your website business, are you prepared to do the work required to get there? Once you have some clarity on your goals, it is time to work toward bringing them to fruition.

Get a valuation

Getting a professional valuation is a crucial early step in successfully selling your website business. It will let you know what you could expect to sell your website business for at the time of the valuation. Equally as important, it will help you understand what drives the value of your business. Once you gain this understanding, you can create a road map of changes you can make in order to optimize the value of your website prior to selling it. 

You can imagine it as being similar to selling a house. If you are selling a run-down house, there likely will be some improvements you can make that would greatly increase its selling price. Remodeling the kitchen, landscaping the exterior, and adding a fresh coat of paint are all changes that could lead to a dramatically more profitable sale. 

When getting a valuation and creating an optimization plan, it is important to get it right. That is why many entrepreneurs choose to work with an experienced business Advisor throughout the process. Your Advisor will provide you with an accurate valuation, help you understand the factors behind valuation, and guide you in creating a successful optimization and exit strategy.

Choose the right time to sell your website business

When it comes to selling your website business, timing is key. There are several factors to consider to determine the right time for you to sell your company. These include:

• Leaving enough time to optimize your business
• Market trends
• Seasonal trends
• Your personal financial situation

Depending on how prepared you are initially, it is often wise to leave yourself 12–24 months to implement necessary changes to your business prior to selling your website business. Of course, not everyone has the luxury of waiting. But by planning ahead of time and leaving yourself enough time to get your business in shape, you increase your chances of achieving a profitable exit. 

The right time to sell also depends on factors outside of your control. In a perfect world, it is best to sell when your industry, and the economy as a whole, is experiencing growth. This will help to raise the sale price of your business. 

It is also helpful to consider the seasonal trends of your business. Many companies experience both busier and quieter periods. For example, if you run a travel website, you may see more visitors and receive more business during the summer and holiday months, while the wintertime may bring fewer potential customers. 

Given this, it is often a good idea to sell your website business as you approach your busiest months. This will frame your business in the best possible light and make it more attractive to potential buyers. 

Lastly, your personal and financial situation has a bearing on the timing of your business exit. For example, if you need a large amount of cash for a down payment or to cover medical expenses, you may feel a certain amount of pressure to sell sooner than later. Likewise, you may need to free up time to pursue a new business opportunity, prompting you to sell.

“Depending on how prepared you are initially, it is often wise to leave yourself 12–24 months to implement necessary changes to your business prior to selling it.”

Clean up your financial statements

Many of the activities you do to prepare your business for sale are implemented with the goal of making your business more attractive to prospective buyers. This raises your sale price and helps you win more favorable deal terms. When doing so, it is important to focus on implementing changes that optimize the Four Pillars of Value. 

If you haven’t done so already, be sure to clean up your financial statements. Many entrepreneurs find it helpful to hire a qualified accountant to create and maintain professional bookkeeping practices. 

Clean financials will make it easier to advertise your business and demonstrate your past performance for prospective buyers. As mentioned earlier, it also helps to instill a sense of confidence that you have run a professional operation. 

Create clear documentation and SOPs

Clear standard operating procedures (SOPs) act as an operating manual for your business. They spell out how to manage and run all aspects of your website company, from marketing and growth to product development and monetization. 

Clear SOPs make it much easier for a new owner to take over operations and run your business successfully. Another added benefit of maintaining clear SOPs is that it helps to make the transition and training phase much easier for you once you have successfully sold your company. 

Implement strategies to drive growth

As we have seen, strong past and current growth trends help to drive up the value of your business. As such, implementing pro-growth changes can help you maximize the profitability of your business. 

The right growth strategies depend on the state of your business. For starters, you may want to consider new ways to monetize your site. These may include:

• Affiliate links
• Paid ads
• Crowdfunding
• Guest posts
• Adding an online store
• Implement Instagram shopping or a Facebook shop
• Sell products via Shopify or another ecommerce platform

At the same time, you may also want to introduce additional marketing channels or strategies in order to fuel growth. These may include:

• Social media marketing
• Email marketing
• Affiliate marketing
• Paid advertising, such as Google Ads or Facebook ads
• Content marketing
• Using Google Analytics to improve your search engine optimization

If you have already implemented a variety of marketing channels, you may be able to further optimize them. For example, if you already have a social media marketing strategy, it may be possible to increase its effectiveness by branching out to a new social media platform that you are not yet on. 

Build teams to manage your business

Building teams will help make your business much easier to manage while it is under your ownership. This allows you to spend more of your time focusing on bigger-picture tasks like driving growth or refining your strategy. 

Efficient teams also make it much easier for a new owner to take over ownership of your business. A profitable business that is mostly automated is quite attractive to prospective buyers. This, in turn, helps to drive up its value.

The more you build teams to automate, the easier it becomes to run your business. You may want to consider building teams or hiring individuals to handle things like:

• Your marketing strategy or execution
• Inventory management, if you sell a physical product
• Content strategy and creation
• Bookkeeping
• Customer service

Eliminate areas of risk in your business operations

Go through your business operations and determine the parts of your business that entail greater risk. When doing so, pay close attention to single points of failure. 

For example, if the vast majority of your website traffic comes from social media, your business could take a serious hit if your social media accounts became jeopardized for any reason, even temporarily. 

By diversifying your traffic sources, you become less vulnerable to changes in any one source. In this example, this may include implementing a content marketing strategy and utilizing paid advertising. 

Where to Easily and Safely Sell Your Website Business

At this point, you may be wondering, “Where can you easily and safely sell your online business?” In general, there are two main methods of selling your company:

• Selling on your own
• Hiring a business Advisor

Selling your website business on your own

Many entrepreneurs consider selling their business on their own. After all, you’re used to figuring things out as you go and carving your own path; why would it be any different for selling your company?

If you do decide to go it alone, there are a number of business listing sites where you can advertise your company. This is a great way to get your business in front of a large number of potential buyers. However, keep in mind that not all of these buyers are truly qualified. 

You may also be approached by aggregator firms offering to buy your business without even listing it. They often make the offer seem even sweeter by promising to take care of much of the legwork of the transaction process. 

However, what they promise in convenience is often negated by lower offers. If you are approached by an aggregator, make sure you are fully informed and proceed with a measure of caution. You don’t want to accept an offer that seems convenient on the surface but is in fact quite a bit lower than you would receive from other buyers. 

“A business Advisor brings many benefits to the selling process.”

Hiring a business Advisor when selling your website business

Selling a business is a complex process involving many different steps. A wide range of knowledge and skill sets are required. For this reason, it may be prudent to hire an experienced business Advisor to help you navigate the new terrain. 

A business Advisor brings many benefits to the selling process. They can help you reach an accurate valuation, create a cohesive exit strategy, and prepare your business for the market. They can also help you find a buyer and compare offers as they come in. For example, would you rather accept an offer from an individual who plans to finance the purchase with a Small Business Administration loan or from an aggregator paying cash?

After you accept an offer, your Advisor will help you navigate the transaction process. This includes negotiating terms, navigating due diligence, drafting the APA (asset purchase agreement) and other documents, and closing the deal. 

How Long Does It Take to Sell Your Website Business?

The amount of time it takes to sell your website business depends on many factors. The state of your business, your goals, market conditions, and luck all come into play. For the most part, however, it is recommended that you leave yourself 12–24 months to prepare your business for the market before selling it. 

Once you are ready to sell, it can take anywhere from 30–150 days or more to list your business, find the right buyer, and successfully navigate the transaction process. However, 90 days is generally considered the average length of time required to complete all aspects of the selling process. 

Conclusion

Selling your business is a significant decision, both personally and professionally. If you are looking to make an exit, the way in which you execute can dramatically impact the overall success or failure of the transaction.

Be sure to understand what drives the value of your business, create a cohesive exit strategy, and leave yourself ample time to implement the strategy prior to your target exit date. By doing so, you can ensure that you are fully prepared to sell your business when the time comes, setting you up for a profitable exit.