Virtual Warren Pick of the Day

Estimated reading time: 2 minutes, 46 seconds

 Just a Reminder;   I use Flippa a lot to get ideas for revenue generating websites.  There are some important questions I ask myself before ANY purchase.  I have a fairly exhaustive list of criteria at my sister site MyMarketingExperiment.com.   This website may or may not fit ALL of those criteria.  Before seriously inquiring on any purchase I dive much deeper, especially at this price point (starting bid 21K).

First I'm going to discuss a few things that concern me about this website then talk about the things I like and whether I'd purchase it.

Negatives

Seller is new,  has no history of selling on Flippa (not a deal killer,  I just don't prefer it)
Revenue appears to have dropped significantly in March onward.
Seller does not promptly answer questions publicly.

Positives

She prefers to do an escrow transaction.
Basically gives a recipe of sorts of how to create a coupon site on the listing.
Explains the dip in revenue from March onward.
Has a large Social Media presence.
Details each network she makes money with.
No ties to the seller after the sale has gone through (with extra licensing, hosting, etc  (See Number 2 on My Criteria Page of Do Nots) 

Questions I would Ponder (by asking myself)

Can I easily reproduce this website?

What is my Discount Rate (the cost of my capital).  I'm all about leverage,  but it has to make sense.  If that money would be better used to make more money somewhere else,  then why this?   The numbers just have to make sense.  See my post on Doing the Math on a Web Acquisition if you want to see how I financially analyze an internet property.

Questions I would ask Seller

How can I be certain that the fans/followers  on Facebook are "real".  It is easy to spoof this information.

I would ask for a more detailed analysis...  I would ask her to submit a post and expose the FB insights.  Actually,  I would do that anyway.   If the numbers don't make sense,  then I'd put less weight on this part of the deal.

I would ask for a back end tour of the site  and its day to day operations,  an "open house or tour" of sorts.  I would also request that I see her stats remotely....  anyone can fake pictures or photo shop them... much less likely when your logged in live.

Ask for the previous owners revenue and traffic stats. (which she agreed she would do)

How much did she pay for the website?   May be easy to find.

Find out the other sites that are hosted on this IP.  Does she own any of them?

finally....

Would I purchase it?

If I had to make a snappy decision after quickly sizing it up... I would go for it.  This is why having a check list of sorts to filter out the junk from the good stuff on Flippa really helps.

The website is only 2 1/2 years old and is producing a decent monthly revenue.   If the numbers add up this may definitely be a nice acquisition.  By quickly sizing a property up and making a quick decision before everyone else realizes what is going on,  you will be enabled  to quickly realize The Four Hour Work Week.  But it's not work if you enjoy it,  right?

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