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The following is my original post on LinkedIn.
If you are a LinkedIn member you can visit the post on that platform - Instant Cash Flow - Buy an Existing Business - Tips to Save you Money
When buying a high value item such as an automobile or an apartment you there are typically standard procedures to follow that simplify the entire process. The clear procedures guarantee the purchase is safe and secure; leaving no room for fraud. However, there are no prescribed norms to go by for buying a website, or even a business. The absence of a defined process makes buyers of websites or businesses vulnerable to scams. So, what can you as a buyer do, to protect yourself from dishonest sellers?
Without proper guidance buying a website can become a daunting task. It is not a simple process where a buyer pays money and just buys a website. That is if you want to keep as much as your hard earned cash as possible. There are tricky dealings involved that can leave you befuddled. As a buyer it would be prudent to first corroborate all the details of the website that are provided by the seller, to make certain they are not fabricated, and you are getting what you are paying for. Once you are satisfied with the findings you can go through with the procedures that involve the actual transferring of the website. These entail making the payment to the seller and ensuring the domain name, website and virtual assets are transferred to you. This looks quite simple when you read about it, but to ensure the actual transaction happens without a hitch, requires expertise.
How to Avoid Fraud While Buying Websites
Buying an established business in the cloud can be very lucrative, but only if you know what you are doing. The first step necessitates identifying a website that you want to buy. This decision in all probability will be based on the performance of the website, as claimed by the seller. In the virtual world there is no place for trust . As a buyer you will need to validate these claims before you move forward. Doing so in an individual capacity might be impossible and you will require assistance of a professional service to determine whether the claims made by the website owner are factual.
A good place to buy an established, revenue producing website is Flippa. You can also use Flippa to substantiate the claims made by the buyer. Flippa does a professional job of collecting and categorizing vital data of websites, which can be used to assess their worth. Alternatively, you can confirm claims on search engine ranking, traffic and revenue that the seller makes through tools available on the internet.
Steps to Ensure Safe Website Transaction
The internet offers a plethora of tools that can be used to confirm the status of websites. Here is a lowdown on some of the best tools available to you -
Search Engine Ranking Validation – Validating search engine rankings is quite simple. Ranking can be verified through tools such as RankChecker and SEMRush. These sites provide almost instant data on website rankings. The data is both current and reliable. Armed with actual Google PageRank and Alexa Rankings you can correctly determine the true worth of a website.
Traffic Validation – The amount of traffic a website receives is important in deciding its value. An estimate of the traffic a website receives can be established at trafficestimate.com. It must be noted here that the website provides only a ballpark figure, which maybe lower or higher than the actual figure.
There are a few things that you can do to use the estimated figure to your advantage .
Be cautious if there is a huge discrepancy in the traffic the seller says the site receives and what shows up on trafficestimate.com. If the seller projects a figure of 45,000 monthly visitors and trafficestimate.com indicates a much lower figure treat this as an indication that the site you propose to buy is not healthy.
Check the figure against the page ranking. If the page ranking is high and so is the estimated traffic, then it is most likely to be high in actual.
In case trafficestimate.com fails to reveal a record for a site it could indicate that the website receives very little or no traffic. You can also verify the traffic via SemRush.com, but I have found it to be way off base when comparing their results with my own websites.
Revenue Validation – Remember the saying “The proof of the pudding is in the eating”? If a seller alleges that his site is earning X number of dollars each day, ask him for evidence to prove his claim.
The seller may try and outsmart you by doctoring revenue stats on listings he shares with you or send in fake stats. You need to confirm the stats are from a valid site and the images have not been tampered with.
The best way to protect your interest is to connect with the seller on Skype. Ask them to setup a screen share so that you are guaranteed screenshots of revenue listing you receive are completely genuine. Look carefully at URL's to see if they are legitimate. Be leery of someone who does not share the URL path to what he/she is showing you.
Treat the Sale as a Business Transaction
Buying of a website is a business transaction between you and the seller. It would therefore be practical to treat it as one. Observe the following practices to avoid being cheated
Signing a sales contract is a common practice in business. It is a contract that is binding and needs to be initialed by the seller. It is within your rights as a buyer to ask the seller to sign a sales contract.
The sales contract is a legal document that comprises of terms and conditions of the sale and protects both you and the seller. A seller who is hesitant to put his signature on this document is in all probability fraud. You should know better than to do business with him; no matter how good his offer appears.
It is wise to use Escrow.com while trading in virtual assets to avoid being robbed of your money. It is unquestionably among the most dependable and safest escrow services. Escrow.com will never transfer money into the sellers account until it is authorized by you. This ensures the seller receives payment after successful handing over of website and domain name; ruling out any chances of fraudulent dealings.
To play it safe you can also stipulate an inspection period, where you can gauge the actual traffic and revenue as against the sellers claim.
Google Analytics is an accurate tool to verify the amount and kind of traffic a website receives. Don’t hesitate to ask the seller for a copy of Google Analytics data of the website, to determine the actual traffic.
The above tips are designed to help buyers protect their interest when buying virtual goods online. It serves as a primer after you have done your initial homework and ready to buy. You can visit my website below where I analyze virtual businesses for sale and whether I would buy them or not. You will see first hand what I look at specifically when venturing into the often uncharted territory of buying a business in the cloud.
Be sure to sign up for my email list when I add new websites that peak my interest. Whether it's selling virtual goods or physical products, you can do very well for yourself by purchasing an established business. Similar to a lot of things in life, you really have to know what you are doing.