Building a Site to Flip on Flippa
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Sometimes we need to recharge our batteries and I’ve taken the past week off, eliminating myself 95% from the internet (still had to check emails, respond to some domain name buyers, and a few other things), but I’m back and today we’re going to talk about something that a lot of people try to do but only a minority of them are able to do it successfully, and that is to build a site and flip it on a site like Flippa. Now, you don’t need to sell it specifically on Flippa, but since it has become the largest site to sell your websites on we’ll use it as our de facto example.
The first thing to understand is that for a relatively new site that has a few months of history you’ll get about 10 times your monthly revenue as your sale price on Flippa. To clarify, if the website you’re looking to sell is making $1,000 a month than you can expect it to sell for about $10,000 (on average) at Flippa. It could be more and it could be less depending on what people think of your site or your monetization method, but 10x monthly revenue is average. Now that you understand that you have some math to do in order to see if this is really going to work for you. How much time will you spend developing a site, marketing it, building backlinks to it, etc… and what is your expected monthly revenue (which will help you determine what you’ll get when you flip it). I’ve heard about someone putting 1,000 hours of their time into a site, it made $900/month, and he sold it for close to $9k. Now $9k is a nice chunk of change, but on a per hour basis this guy basically worked for $9/hour. I’m not sure if he was happy about that or not, but it is an important thing to factor in the beginning.
Moving on… there are a few ways you can approach building out a site in order to flip it. The first approach (which would be my favorite) is that you outsource the whole entire thing and you try to become an arbitrager. You come up with the concept for the site, head over to an outsourcing site like Odesk, and hire a contractor to build it for you. I would highly recommend using WordPress because when you flip your site the buyers are very comfortable with WordPress. If you use a custom content management system you can still sell your site, but the buyers might thin out because a lot of them don’t want to spend a ton of time learning a new CMS for one site. I think you could find a contractor to build out something for under $500 as long as it’s not too complex.
Next step, you will probably need content (assuming it is a content based site). You’ll have to hire an article writer and to make your site look beefy and interesting to buyers I’d recommend you get 100 pieces of content up on the site. You can find quality article writers that will charge $5 for 500 words. You may go with that, or if you really want to make your site look great you could get 1,000 word articles. Let’s say you choose the 1,000 word articles, for 100 of them you are looking at $1,000 in expense. When you get the articles, don’t post them all on one day. Drip feed them onto your site at about 2-3 articles per day. It looks much more natural to the search engines.
Third step, marketing/SEO. This is highly variable and you’ll need to determine your plan. You could hire someone to make a Facebook fan page, a twitter account, a Pinterest account, etc… if you really want to try to go more large scale and build up your social marketing efforts. You might spend $100-$200 here. But whether or not you want to add that social marketing you will need some SEO work. Do Not hire low quality crap for your SEO work. Google keeps getting smarter and you need to hire someone who is tune to that. You need backlink variety, a mixture of anchor text and URL, linking to more than just your homepage, etc… Hopefully the keyword(s) you want to attack and not too tough competition because that can get very pricey. Let’s assume the keyword competition is medium to easy. You’ll drop another $1,000-$2,000 to get the job done right.
At this point you’ve done all the main things you need to get done. You’ve spent $3,500-$3,700 and you have a nice looking, unique, WordPress based site with 100 articles of 1,000 words and some solid SEO work done. This base you created will look attractive to potential buyers when it comes time to sell. But you can’t sell yet because we haven’t talked monetization yet. YOU NEED to have a plan on how you will make money before you hire anyone. You need to have a goal of how much you can make per month on average. In our example, we spent $3,500 so our goal should have been to make at least $30/day with the site. That is $900/month and with our 10x revenue multiple we can sell this for around $9,000 in a few months.
Why do people like to do this? Well look at the math… we spent $3,500. We generated $900 a month for a few months (let’s say 4 months) so we earned $3,600 in profit. Right now we’re at break even and we have this valuable asset to sell which will get around $9,000 which is going to be pure profit. The best part is that you didn’t need to do much work yourself besides picking the right topic for the site, hiring people, and monetizing the site. This example above should have cost you no more than 20 hours of your time.
Now I said outsourcing the entire thing was one way to do it, the other way… do it all yourself! Yikes, not sure you want to do this all yourself. You’d need to be an expert in all phases and while many people like to think they are an expert at everything the truth is that they really are not.
If you don’t have money you can invest you may be forced to go at it alone. What I’d recommend is you start small. Use WordPress. Use a free template from somewhere. Put only 10 articles on the site. Make sure the competition is low for the keywords. Build quality backlinks. Try to earn $5/day with the site (i.e. $150/month). You can sell this for around $1,500 (maybe less if the buyers see there is only 10 pages of content and the theme is a free theme), but at a minimum you should get $1,000. Do this a few times and build up your bankroll and then before you know it you’ll have enough cash to begin outsourcing the whole thing. A lot of people are lazy and want money today, but the fact is that here is a complete blueprint for anyone to start out with and within a year or two’s time you can be pulling in mid to high five figures per year and it’ll only keep growing.