In the digital era, there are so many opportunities for the budding entrepreneur. You can start a business, network, and trade assets, all with nothing more than a laptop (or even a smartphone) and a stable internet connection. And with asset trading always a temptation, a popular trend in the last few years has been website flipping.
Website flipping, as the name suggests, is about buying websites (often ecommerce businesses, but not always), working on them, and ultimately selling them for more than you paid. If you’re not too interested in the real estate market or playing guessing games with currencies, it’s a convenient way to embrace your inner haggler.
But as with any kind of trading, the winners can only win big because the losers fail so miserably. If you’re not careful, you’ll end up on the losing side more often than not, and your website flipping experience will prove a very unhappy one. To help you succeed that, this article is going to cover the basics of what you need to avoid when flipping websites. Let’s get started.
(Almost) any website that runs on an old CMS
Not all websites are created equal. Even if a website looks great on the surface, it might be running on an ancient and no-longer-supported content management system (CMS), or even a custom system developed to suit very specific requirements that differ from yours.
While it’s often possible to port a website from one CMS to another (typically using export/import functions), there are plenty of cases in which a system is so outdated or peculiar that it’s prohibitively expensive to export anything. And if that’s the case with a website, what’s the point in buying it? It would be like buying a broken-down house that would need to be demolished, only without the benefit of owning the land.
When looking at websites, be sure to check what systems they use. You can do this using a service like WhatCMS, or simply use a store marketplace that serves only websites running on a specific and regularly-updated modern CMS. Confirm that the tech is current-gen, and you’ll have the confidence that the website won’t need a fundamental overhaul.
Ecommerce stores without sales figures
Ecommerce stores are great for website flipping because you raise their value by making sales. If you do a great job of bringing a store to prominence, you’ll profit twice: first by making sales profits, and again by selling the store at a higher price as a result. But you need to be careful with ecommerce stores because the figures can be obscured. You need the real numbers.
If you see a store listed with some unsourced claims about its success (on a generic marketplace like eBay, for instance), don’t believe them. Just as sellers lie about products, store owners lie about their websites to raise their perceived value. You need specific metrics directly from the ecommerce CMS, and even then you must be wary of how they’re presented.
The Exchange marketplace does have the advantage of presenting precise sales data pulled from Shopify dashboards. When you see the proposition of profitable businesses for sale, you can check the stats to see if the listed stores meet your definition of “profitable”. If you’re not satisfied with what you see, you can walk away. That’s the value of that information.
Hosted sites with weak domains
The domain of a website can be quite important — all the more so if it runs on an inclusive hosted CMS that may make it slightly tricky to move the site. And if you do choose to move the site, you’ll lose any established ranking potential of the original URL (it’s also thought that older domains are viewed as more reliable by Google to some extent).
As such, you might take a look at a website that seems like a great asset — attractively designed, on a good CMS, set up with a strong range of integrations, in a valuable niche — but see that the domain is totally unsuitable (too long, too abstract, incoherent, etc.).
In such a case, you’d likely be better served finding a comparable website with a better domain. It’s faster and easier to change a website’s look than it is to bed in a fresh domain, especially since time is of the essence for a website flipper (it may not be economical to hold on to any given site for very long).
Paying too much for one website
Just like a standard investor, it’s important that you diversify your portfolio. That way, you won’t be reliant upon the success of any one website, and should you suffer a total failure through buying a site that you can’t find a seller for, you won’t irrevocably damage your entire operation.
As for how much is too much, well, that really depends on what your budget is, how serious you are about website flipping as a career, and how confident you are in your ability to raise a website’s value. If you’re absolutely certain that you’ve found a site you can make massively more valuable in a couple of years, you might want to spend more to get it and treat it as a long-term investment — otherwise, keep your maximum spend down, and spread the risk.
There you have it: the basic things you need to avoid when working as a website flipper. It’s an interesting and increasingly-viable side hustle, but if you’re going to be trading in digital assets, you need to know how to value them, and how to minimize risk. Good luck!