Out of the blue, almost 2 years to the day from when I started my niche website, I got an unsolicited valuation offer of more than $200k!
In this post, I am going to reveal what it’s like to get your affiliate website (or other online business) valued, where to sell it, and what factors to consider.
Before I get started, you might want to review how I got to this point by reading my first post in this series. It walks you through how I built a niche website valued at $217,500.
It’s okay – I will get a cuppa whilst I wait.
Right, all done!? Great, let’s carry on.
What Did I Do to Get a Website Valuation?
The whole valuation came out of the blue. It was definitely not planned!
I was checking my email every week as I always do for my affiliate website. That means going through all of the emails asking to contribute guest posts, Tailwind summaries for my Pinterest traffic, etc.
All of a sudden, I came across an unexpected email from Flippa (below).
Selling wasn’t something that I had been considering at the time, so I went back to them asking what they would consider a decent price.
A decent price for them might not have been a decent price for me, so I thought I’d ask.
They came back to me fairly quickly, saying:
“A very rough ballpark for a site that is 2+ years old and generating traffic organically is between 1.8x and 3.5x annual net profit.”
This piqued my interest, as I knew that I had been running my website very profitably. I built a report to enable me to do just that.
So I gave in and got a valuation.
Flippa had already sent me to their online valuation tool, which took me ~3 minutes to complete and get an answer!
When that valuation came back, I was taken aback by the estimated range of $169,937 and $207,701.
I had an idea of how much the website was valued, as within the report that I use, I added in a website valuation metric – but to hear it from someone else was encouraging.
I took a day or two to think about the valuation and decided that if I am to believe this, I needed a second and third opinion.
Get Other Valuations to Verify the First One
When you get a quote to have work done, you get three, right? (If you don’t, then you need to!)
By getting three quotes, you have a good understanding of the actual cost and whether someone is just pulling the wool over your eyes.
Which metrics matter?
When you go through the vetting process with multiple companies, you are going to be asked for a lot of information.
Most companies will tend to ask you for the same information, so I would strongly recommend that you put all of this information into a single document that can be shared and updated.
My suggestion for this would be a Google Doc/Sheet, but that is down to personal preference.
To get you started, I have added below most of the questions that I was asked during the assessment phase:
- How much time do you spend on the business each week and do you have a team in place?
- What do you do within the business?
- Who generates the content and how regularly is it updated?
- Is income stable, falling, or growing each month?
- What are your main sources of income? Is it just Amazon and Ezoic?
- Do you use PBNs, buy, or swap links?
- Do you have any other [live] domains that operate in the same niche?
- Can you provide Google Analytics access?
- Can you provide Google Search Console access?
- Can you share with us your Amazon Tracking ID?
- Can you provide in an XLS your Amazon Earnings Report – Up to 2 years (or as long as possible)?
- Can you fill in our PnL template for the past two years (or as long as possible)?
Knowing how much profit you make
The metrics that are the most important here mainly relate to your profit and loss (PnL) document.
Companies want to see that you are profitable over the past six months and that the website is generally growing throughout the year.
It is therefore imperative that you have an up to date PnL that shows the following information on a monthly basis:
- Spend £/$
- Income £/$
- Profit £/$
- Profit %
There are many ways to track profit and loss. Before I created my report, I used a basic Google Sheet to track all of my financial activity.
Showing website growth
You will need to show that the website is growing, and the easiest way to do this is to provide them with access to Google Analytics and Google Search Console.
Analysis of both tools will enable the company to see whether your niche website is growing year on year.
Proving that the site has been built for the long term
There are lots of ways that you can build websites to generate a good return.
However, some of those methods are not above board and can result in penalties and lost revenue.
It is important that you are able to prove that you have built your website with a focus on long term success and not short term gain.
This means not using PBNs or shady link building tactics. Now, if you want the letter of Google’s law, all link building is technically shady, but it is an accepted practice.
You just need to stay on the right side of the line, but I won’t teach you how to suck eggs – I am sure you know what I mean here!
If you look around, there is a huge fluctuation in the multiplier that you should be looking at – so much so that they range from 20-40x.
The multipliers I was provided was a case in point:
- Empire Flippers gave me 32x my average profit from the previous six months leading up to the valuation.
- FE International gave me 2.91x my average profit from the previous six months annualised.
- Flipper said I would get somewhere in the region of 1.8x and 3.5x annual profit.
- My own report bases it on 36x my average profit from the previous six months.
My recommendation here is, if you are looking to sell, then for the six months prior to the valuation process, strip back on all unnecessary costs, maximising your profit levels as a result.
Alternatively, you could work on a similar approach to me, where I aim for an 80% profit margin!
Why I Didn’t Sell….?
This was the hardest bit of the entire process: the decision!
The valuation of $217k is no small amount of money, but it’s not life-changing and needed to be thought about practically. As I am a business based in the UK, I had to think about the following points that affected my decision:
- The conversion rate to £GBP wasn’t great
- There was a 15% commission fee from all of the companies that I spoke to, and none were willing to move on that
- There was a further 10-19% tax I would need to pay towards the UK government
Taking all of that into consideration, I would be taking home in the region of $135k (£100k) which is a significant difference from the valuation.
Add to that:
- There was still a huge growth opportunity in the website
- I had just built a content production system that was working
- I was working on the site ~4-5 hours a week
- I was coming up to the golden quarter where most businesses make 40% of their profit
I just felt there was more to do before I would be in a position to accept the valuation.
So, after talking to my wife, I turned down the valuation and suggested they contacted me in 12 months’ time where I intend to be in a much better position.
A question I have been asked since is, do I have a number in mind? If it’s not $217k, then what is it?
The honest answer is, I don’t.
I never set out to build a site that I would sell. I set out to test myself and keep my hands dirty, as my work life becomes more of a managerial/coaching role.
I wanted to earn a little, build it over time, and never expected to earn the amount that I am at the moment.
2020 will see the site earn the equivalent of my wife’s salary – for a total of 32 days of work in a year. That’s just ridiculous, but one for another post.
I am going to keep building it until I am bored, or a valuation is just impossible to turn down.
Saving Time with the Amazon Associates Dashboard
Both Empire Flippers and FE International wanted a lot of information.
But the numbers they asked for were located on different platforms. This would have meant having to go into each platform to either take screenshots and/or give these third parties access to root around.
This back and forth I imagine would have happened if the data wasn’t what they wanted – or if they needed more for different timeframes – would have been painful and time-consuming. Almost not worth the time and effort.
I understand that you probably think that I am stupid for saying that, it’s +$200k, but I value my time a lot, it’s precious to me. This site is not the only business that I run.
So, before I went through that trouble, I asked if I could just provide them access to my Amazon Associates and Publisher report. It would give them all the information they needed:
- An overview of website performance for the entire time that I have had the site
- Amazon performance at a granular level (Best selling products/categories, devices driving conversions, how many returned products, etc.)
- Ad Publisher information with an overlay of AdSense and Ezoic in a central location
- Google Analytics information including conversion tracking from my site to Amazon
- Google Search Console information, including highest performing pages and average positions
- And most importantly, an up-to-date PnL
Luckily for me, both companies were happy to use the report and base their valuation on the information that it provided.
For me, it was easier and more convenient to give them access to my report, with all the necessary information in a single location – plus it’s more secure. As soon as they provided me with the valuation, I removed their access so that I could be safe in the knowledge it won’t get into anyone else’s hands.
Once they had the information, I simply had to sit back and wait for their valuations. Click the link if you’re interested in getting access to the Amazon Associates report for yourself!
Getting to this six-figure valuation wasn’t easy. It took time and commitment, especially once I got the enthusiasm back.
One thing that I can’t overstate is the need for systems and data in a central location.
Once I had the systems in place and the team working cohesively, things started to fall in place. The final part of that jigsaw puzzle was the report that I created.
Bringing all the data into a central location and overlaying the different data sets really allowed me to level up my thinking.
I no longer had to guess what products were selling the most, or what pages they were being converted from – it was all in a single place.
And because I had built a valuation metric into my report, this gave me an easy way to validate that any offers I got were fair.
You can check out my dashboard tool here – and stay tuned for the next post in this series where I go into detail about key lessons and takeaways from building my affiliate site!
If you missed the other post in this series, take a look at how I built a website valued at $217,500 in 2 YEARs.