The internet can make you rich. Very, very...VERY rich.
Aside from operating WordAgents.com, I also build, maintain, monetize, and sell a number of niche websites. I’ve been doing so since 2012, and only seem to find more and more opportunities to continue doing so as time passes.
Back in 2014, the niche site industry was very much up-in-the-air. Google’s Penguin algorithm was absolutely destroying people’s businesses, and there really wasn’t a clear path forward yet.
It’s common for our team to become friendly with our clients and ‘talk shop’ from time to time. This type of conversation is exactly what lead me to meet Dan Da Silva; a client turned JV partner.
Dan and I had similar views as to where this type of SEO was headed, and we decided that combining our resources to start a new site would be beneficial to everyone involved.
We officially launched our niche site in December of 2014 and sold it through FE International on October 19th, 2016 for several hundred-thousand dollars. On top of the sale of the website, the site grossed close to $200,000 in earnings throughout the same period.
In total, our niche site grossed just over $690,000.00 in under two years.
Dan and I decided that our system worked so well, that we should build other sites together using a similar strategy. To date, we have three additional niche sites in which we see success.
What You’re About to Learn
This case study is going to be a little different than what you’re used to reading.
We are not going to provide you with a step-by-step strategy to get a new niche site off the ground. Instead, we’re going to offer you a general outline of the steps we used to build our site.
If you are seeking a step-by-step tutorial that takes you from zero knowledge to superstar, I highly suggest the following courses:
Both of those options will take you to where you want to go. This case study exhibits just one way to skin a cat.
We may include a few affiliate links throughout this article to help pay for the time it took to put together. When all is said-and-done, it will have taken us about 20-30 hours to complete this article. If you are at all opposed to us earning a little bit for our time, please contact me, and I’ll get you a clean link.
Another important point to note is the fact that, according to our sales contract, we cannot divulge certain information such as the niche we were in, the companies we promoted, or the name of the site itself. We’re legally obligated to this and cannot offer this type of information - even by e-mail or private message.
With that said, we are very keen to answer any questions our readers may have. Feel free to leave a comment or contact us at any time!
What is A Niche Site?
Ask a hundred people this question, and expect one hundred different answers.
The industry is relatively young, and we’re all doing our part to shape it. However, there are still several different factions under the umbrella of “digital marketing” that may define things differently.
Our definition of a niche website is any website that covers a topic as comprehensively as possible. The goal of a niche website should be to become the primary source of information on a given topic.
In short, you want to be the website that people think to go to first when they need an answer.
Words are nothing without illustration, so let’s brainstorm a few niche site topic ideas:
- A website on dog training tips… definitely a niche site
- A site that provides an entire history of a single sports team… pure niche site
- A fitness blog for senior citizens… no doubt it’s a niche site.
The topic does not matter. The only thing that matters is that you’re covering the topic factually and comprehensively. You become the authority.
How Does a Niche Site Make Money?
There really are countless ways that you can “monetize” your website. The reality is that you’ll learn which monetization strategy is best for your site through tireless testing.
A few strategies include:
- Placing ad network advertisements on your site
- Signing-up for a specific product’s affiliate program and promote it on your site for a commission
- Hooking up with a pay-per-call company and add an affiliate phone number to your site
- Creating a paid premium section on your site
- Offering a membership to a forum or newsletter
- Selling an actual product
The list goes on and on…
Dan and I had a few solid ideas going into the project as to how we were going to monetize our site.
We analyzed a lot of options, but in the end, we stuck with our initial gut-feeling and monetized our site with CPA affiliate offers.
I wanted to go off and monetize in a million different ways. Dan kept me focused and helped me realize that 100% of our efforts and resources should be directed at one goal: converting visitors into customers of the service we were promoting.
Why Build A Niche Site?
Building a niche site is no doubt a business venture, and needs to be treated as such.
It can take several months to over a year before your niche site is paying for itself, so you absolutely need to be prepared to dedicate a minimum of 15 hours per week to your new business.
If you’re prepared to do the work, the benefits are life changing.
Building niche sites is something that’s relatively new. You get to solve new problems, and your ideas may help shape the industry for years to come.
While there is a lot of work involved, the barrier to entry is surprisingly low. I don’t know of many other businesses where the only input you need is time to get started.
Your earnings potential from niche sites is almost limitless. Take a look at the most recent survey of median weekly earnings by education:
As you can see in the graph above, the median weekly earnings for individuals with an advanced degree, which includes Master’s, Professional, and Doctorate degrees, is approximately $1,386. That’s about $72,000 a year.
With niche sites, you won’t make that much in the first year. You might not even make that much in your third year. But, if you keep at it, you will blow that number away.
The only thing keeping you from that much money is yourself, and how much time you want to dedicate to your business.
There are implicit benefits as well. As a niche site owner, you will end up networking with vendors, writers, blog owners, influencers, and trolls. Each one of them holds the key to open a door that may have been otherwise unavailable to you. Your niche site may tank, but the connections you make may be the source of your riches.
The final reason I build niche sites is that it’s simply fun. I have a good time with it. I bullshit with like-minded people. I love analyzing data and seeing the answers within. I love trying a new strategy and the feeling I get when it works. I love being able to set goals and surpassing them ahead of time.
The Importance of Setting Goals
Before I even knew what quant marketing was, I always reverse engineered my goals until I had a series of tasks that needed to be completed in order to reach that goal.
Just ask Dan…
Our Skype conversations consist of me throwing goals and task-lists at him all day long.
Goals, goals, goals.
Breaking down goals into manageable pieces.
It just works.
And, more often than not, when you work backward from where you want to be, you end up overshooting your goal and achieving more than you thought possible.
Here’s a process you can apply anywhere in life:
- Set a goal for where you want to end up
- Break what you need to do down into manageable tasks
- Organize those tasks into the order in which they need to be completed
- Assign a date to each task for when it absolutely must be completed
The key here is that we are setting deadlines for each task. If your final goal is going to take a year to achieve, it’s going to be pretty difficult to hold yourself accountable unless you have milestones you must reach in the meantime.
This is how we set our goals for our niche site, and we think it will serve you well.
When we were first brainstorming the site, we always held onto a few basic, long-term goals:
- Use organic search as the primary driver of traffic
- Operate as lean and efficient as possible
- Promote CPA offers with higher than average payouts
- Build, rank, and flip the site and use the proceeds to fund other sites
Every other effort related to this niche site evolved directly from these initial goals. All we had to do was work backward from each goal and create a game plan. After that...it’s all about execution.
Tools We Use
Without tools, we’d all be starting at square one. While the tools we used may not be 100% necessary, they do help leverage your time… which is absolutely priceless.
- Hyper6 Design: We used these guys to do our graphic design for our custom WordPress website. (Use code WORD10 for 10% off!)
- SEMrush: a powerful web-based suite of tools for domain and keyword research.
- Ahrefs: backlink, keyword, content, and organic traffic research.
- Clicky: monitor and analyze your traffic.
- SerpBook: a high-quality rank tracker at a decent rate.
- Thrive Content Builder: drag-and-drop visual editor for WordPress.
- WPX Hosting: extremely reliable, inexpensive WordPress hosting.
- CrazyEgg: allows you to understand how your visitors engage with your site.
- MailChimp: an e-mail marketing platform.
How To Pick a Niche
Niche selection does not have to be a long, drawn-out process.
Never allow yourself to become paralyzed by too many options, or because you can’t find an option that doesn’t fit your exact parameters.
There will ALWAYS be obstacles. It’s our goal to start off with as few obstacles in our path as possible. This is the sole reason to pick one niche over another.
When choosing a niche, simply list out your interests on a piece of paper. It’s important that the niche you select is something that you’re personally interested in, as it’s very likely you will be involved in the niche for the next several years.
How do we choose a single niche from a giant list of interests?
Well, we can do this in two steps:
STEP 1: FOLLOW THE MONEY
The niche you select will need to be worth it for you. While it may be very fun for you to create a site on the topic of “Vintage Thimbles,” it may not be the most profitable idea on your list.
So, the first thing we do is a search for any of our ideas that are not commercially viable.
- List 10 random things directly related to a single idea on your list
- Do a separate Google search for your main idea and for each of the things you listed
- On each of the searches, look to see how many advertisers appear in the right sidebar. More is better.
- If you most or all of the results do not display advertisers in the right sidebar, this main idea is not worth pursuing
- Repeat this process for each of the ideas on your list
Now that we have eliminated the ideas that are not worth going after, we can now analyze the remaining ideas to see which one actually have profit potential. We do this by looking at the estimated cost-per-click for our brainstormed keyword ideas.
There are lots of tools out there that can give you this info, but we’ll demonstrate with the Google Keyword Planner, as EVERYONE has access to it.
The first thing you’re going to want to do is to log into Keyword Planner and click “Get search volume data and trends.”
Next, you are going to list one of your main ideas, and it’s ten related brainstormed keywords and click the “Get search volume” button.
You’ll be presented with results that look something like this:
What you want to analyze are the dollar amounts in the “Suggested bid” column. This is the average amount that an advertiser will pay per click.
We want our main idea, which is “dog training” in this case, to have a dollar amount of $2.00 or more. Personally, I typically look for cost per click of at least $8.00 or more, but that isn’t necessary.
You’ll also want to take a look at the suggested bids for your related ideas, too. If most of them are hanging around $2.00 or higher, you’re in good shape.
Similar to the previous process, you will want to repeat this for each of your main ideas and their respective related ideas.
Any main idea that has a cost per click of $2.00+ is worth continuing to research. Any main idea that does not meet this requirement should be crossed off the list.
STEP 2: FIND THE NEED
Now that we have a list of potentially profitable niche ideas, it’s time to figure out if people actually want this information.
We already have a slight idea that the niches on our list have a substantial target market because companies are actively advertising to those markets. That tells you that there are people interested.
What we want to know now is how many people are actually interested, and how long into the future this interest will last.
This can be easily determined with a few searches on social media websites like:
What we’re looking for are tons of conversations on our main topic. Let’s run through this exercise together using our “dog training” example:
Quora is one of the most popular Q&A sites online. When you search for your topic, you’ll quickly find if people are asking questions on it or not.
Not only did we find a TON of questions on “dog training,” but we also found a topic dedicated to it.
So far, so good.
On Facebook, we look for active groups with lots of members. Check it out:
Surprise, surprise… there are countless active Facebook groups on the topic of “dog training.” Many of them have over 1,000 members. Things are looking good…
I look for a subreddit dedicated to the topic I’m researching.
This looks perfect. Over 50,000 subscribers to this subreddit and new activity every day.
“Dog training” gets a pass for step 2. Rinse and repeat this process for every idea on your list.
STEP 3: FILL A VOID
Our final step in determining a good niche is to see whether or not there’s an opportunity for us to actually rank on the first page for most of our target keywords within 18 months.
Now, a full-on competitive analysis is beyond the scope of this article, but there are some simple rules of thumb to follow when evaluating the top 10 results for your main topic.
- Top 10 results are made up of internal pages
- Top 10 results are not all optimized perfectly for your main keyword
- There are 1 or more other niche sites in the top 10
- The majority of the sites have 100 or fewer backlinks
- There are 1 or more sites on in the top 10 that are under 2 years old
- Some of the sites in the top 10 have under 100 pages
- A single site has more than one result in the top 10
- The results are mostly homepages
- The results are mostly 2 years old, or older
- The results have thousands of pages on their site
- There is one or more result in the top 5 that already comprehensively cover the niche
- The majority of the sites have thousands of backlinks pointing to their site
- The sites are perfectly optimized for your main keyword
Now, you need to realize that there will always be competition in your niche. The goal here is to choose a niche that has the least relative competition.
This step will likely rule-out most of your idea list. You should be left with 1 to 3 options that you feel may go either way with. These are the ideas you want to choose from.
The final decision on your niche is really up to your preference. You already know that there is money to be made, people have questions that need answering, and there’s somewhat of a void that needs to be filled.
Your choice now is completely up to you. Go with the niche that you’re most interested in and wouldn’t mind being involved with for at least 5 years.
Keywords & Where to Find Them
I’ll tell you right now… you need to get over your obsession with search volume estimates.
Google is already telling us that it’s moving away from exact search volume estimates with their new update to Keyword Planner.
Instead, you should concern yourself with searcher intent and the contextual meaning of your content.
I could write another 10,000 words on this topic, but it’s unnecessary. All the info we need is already sitting right in the top 10 search results for our main niche idea.
All you need to do is reverse engineer the sites ranked in the Top 10. These sites are meeting all of Google’s criteria for being ranked highly for the given keyword.
You need to figure out what keywords they used in their content in addition to the primary keyword you’re targeting, and work them into your content as well!
The reason for this is that these secondary keywords will move the relevance of your content closer and closer to the intent of the searcher. You’re giving them what they want. You’re improving contextual meaning.
Here are the steps we go through for this process:
STEP 1: LIST OUT YOUR COMPETITORS
By now, you should have a good idea of your main competitors for this niche. List them out on a piece of paper / spreadsheet / document.
We’re going to analyze each domain individually.
STEP 2: FIND THEIR TOP PAGES
Log into AHREFs and enter one of the domains into the search field and click “Explore.”
In the left sidebar, click the “Top Pages” option.
This will now give you a list of the highest trafficked pages on your competitor's site, as well as the keyword that each page is ranking highest for currently. This is gold.
Export the file and delete out any pages that receive less than 100 visits.
STEP 3: FIND KEYWORD GROUPS FOR TOP PAGES
Log into SEMrush.
Grab one of the URLs from the list you just exported from AHREFs. Paste it into the search bar and click the “Search” button.
Once processed, click “Organic Research” in the left sidebar.
The resulting page will show you all of the keywords that specific URL is ranking for currently.
You now have:
- A topic idea
- A main keyword, and
- A list of secondary keywords you should include in the article to make it super relevant
You’re now a keyword master.
You’ll want to rinse and repeat this process for all of your competitors and all of their highest trafficked pages. Combine all of this in a giant spreadsheet - and you have keyword and content to focus on for at least the next 1-2 years!
I wish I had the foresight to flesh-out this process when we started our niche site. We had started the site using old methods of keyword research that focus on one primary keyword per article.
The new way, described above, has been much more effective. We were seeing all of the keywords for a new article ranked in the top 20 within 1 month of posting each new article.
Buying A Domain Name
Unless you’re ready to drop a nice amount of cash on a premium domain name, you’re going to have to be a little creative with branding your new site.
My go-to strategy with coming up with domain names is to use either the exact-match or partial-match variation of your main keyword and add a prefix or suffix to it.
A few examples:
- Exact-match + suffix: DogTrainingTipsCentral.com
- Prefix + exact-match: BestDogTrainingTips.com
- Partial-match + suffix: DogTrainingTutorial.com
- Prefix + partial-match: EffectiveTrainingTips.com
You get the idea. You want to take your main keyword and tweak it until you find something that is:
- Available to register, and
- Represents the topic of your site accurately
I will generally brainstorm 20 to 50 of these ideas. It usually takes that many to find one or two that are available to register.
I use Bulk Search from Dynadot when researching domain names. It saves us a lot of time.
Speaking of registering your domain, I have and probably always will use Namecheap.com to register my domains.
It’s just a preference thing, but I really like their dashboard and the fact that they release monthly coupons for 1-year registrations.
The brand name we eventually came up with included our most broad main keyword plus a suffix. It rolled off the tongue nicely. We were able to register the brand on .com, .net, and .org domains.
We registered all 3 domains for 5 years.
Probably one of the most looked-over aspects of building niche sites, the quality and speed of your web host is essential.
While I understand the need to keep costs low when first starting up, spending money on quality hosting is probably something you’ll want to invest in for your site.
When choosing a hosting service, you’ll want to keep an eye out for:
- Quality of customer support
- Speed of the server
- PHP capable
- Available tools / apps on backend dashboard
- Uptime reliability
- Data transfer limits
For our niche site, we started out on a shared account from Hostgator. Eventually, we migrated to a higher-quality WordPress-optimized account from WPX Hosting.
We experienced a noticeable uptick in rankings and time-on-site, and a noticeable downtick in bounce rate within 4 weeks of migrating the site to a new host.
How To Build Your Site
Teaching you how to build a site from scratch is a bit beyond the scope of this case study, but there are a few rules of thumb that we can offer you.
We build all of our sites using the WordPress content management system (CMS). There are other options out there, such as Drupal and Joomla, but WP is the most widely used and supported.
The control panel on your hosting account should have an app / tool that will automatically install WordPress for you at the click of a button.
Once you have the basic install for WordPress setup, you’ll want to search for a WordPress Theme that will become the actual design of your site.
We evaluate these themes by the following criteria:
- Is the theme responsive?
- How fast is the theme out-of-the-box?
- How easy is it to customize?
- What kind of tools / features are available in the theme settings?
The final step to getting your niche setup is to install WordPress Plugins. These are installable tools / software that affect how your WordPress website operates. The benefit here is that it takes 2 minutes to install a plugin, whereas coding the feature directly into your site will take significantly longer.
Our favorite WP Plugins include:
- Thrive Content Builder
- Yoast SEO
- Wordfence Security
- Pretty Links
- W3 Total Cache
The plugins you use will depend on the topic of your site and the functionality you are seeking. There is no right or wrong way.
Creating Great Content
Being that we’re a content creation agency, I’m sure you can guess that we put A LOT of effort into the content on our niche sites.
We create informational content that covers a question or topic as comprehensively as possible.
While we don’t really follow Backlinko’s techniques and suggestions as much of some of their brand advocates (there’s a lot of ‘em), we do subscribe to the idea that content on a specific topic must match and exceed all other content on the same topic.
The skyscraper technique is awesome and just can’t be argued!
So, what kind of information can be included in a piece of content to make it comprehensive?
Let’s take a look:
- Similar info as the top 10 results for your topic, but expanded in greater detail
- History of the topic
- Current news for the topic
- Famous people who advocate / promote the topic
- Products / services that people interested in the topic might find useful
- New data from research you’ve conducted yourself
- Step-by-step instructions or processes
- Local area information for the topic
If you use this as a checklist every time you’re sitting down to write a new article, you’ll be in very good shape.
But...this only covers one part of the overall picture.
You also need to make sure your content connects with your readership. Simply writing up an informational article without grabbing the attention of your reader first is the fastest way to failure.
Let’s take a look at a few ways you can connect with your readers:
- Empathize with readers, so they know you’re facing the same problems, too
- Use industry slang and jargon words
- Use short & sweet paragraphs that are easily absorbed
- Use subheadings, bullet lists, and other interactive content that help make your writing “scannable”
- Link out to the primary source of information any time you make a claim or present data / statistics
- Be a “friendly expert” - humor will help keep their attention
Content creation is more of an art than a hard science. If you’re able to weave valuable information with an empathetic connection to your readers, you’ll see success much faster than otherwise.
Optimizing Your Site
On-page SEO changes very little from year-to-year. We don’t feel that this is something to obsess over, but there are a few rules of thumb that we like to follow.
We create two headlines for every article and utilize both by implementing features from on the Yoast SEO plugin. One headline is used for the title tag, and the other is used for the H1 tag. By doing this, we can help increase the relevancy of our article.
Every article get’s a unique Meta Description. The Moz preview tool is a big help in creating these.
Regarding keyword density, we use our main keyword no more than 3x per 1000-words of content. Secondary keywords get mentioned no more than one time. And, if we’re feeling sassy...we might mess around with TF*IDFoptimization as well.
Every piece of informational content gets plenty of outbound links to supportive content on other websites. Our rule of thumb is 1 outbound link for every 200-300 words of content.
We normally do our internal interlinking when we post / format the content. I’ll usually throw 2-3 internal links into each article.
Bullet lists are a great way to break-up the content and make it more scannable. We don’t force this into every article, but tell our writers only to use a bullet list where it seems logical / appropriate.
Speaking of making content scannable; each article receives multiple images and YouTube videos.
For a full-tutorial on on-page SEO, I highly recommend Day 8 of BuilderSociety’s crash course. Best part about it…. It’s free!
I heard the guy that wrote Day 7 is a real wordsmith, too. :)
Regardless of what anyone else tells you, backlinks are still a YUUUUGE part of Google’s ranking algorithm.
Our off-site strategy is generally light-grey to full-on white hat.
Types of links that we build:
- Editorial links
- Guest Posts
- Social media links
- Video Links
- Audio Links
- Wiki Links
- Slideshow links
- Q&A links
Any publicly offered link service was approached with caution. We generally used these to adjust our anchor ratios and increase branded and raw URL anchors.
Dan had built a small number of PBNs when the site first started, which really go the ball rolling for us. We weaned the site off of them as time went on, and general public consensus turned sour towards PBNs.
Our bread and butter has been editorial links and outreach.
We were obtain a lot of very high-quality editorial links from high-end news outlets through a variety of providers, such as Dejan.
All of our outreach has been completed by Steve Brownlie - which has worked out phenomenally. Steve really knows what is needed and executes without fail.
For a full tutorial on link building, we highly recommend the Authority Hacker Pro course. It’s paid, but you get access to some of the most helpful information out there. There’s also a private Facebook group included, so you can bounce ideas off of other like-minded SEO’s!
The way to tell whether or not your hard work is paying off is by tracking the current rankings of your keywords.
There are plenty of “rank trackers” out there. These services allow you to input your keywords and maintain an overhead view of your rankings on search engines for each keyword.
Each has their own benefits and drawbacks. I personally use SerpBook, but you should pick the tracker that meets your needs and fits in your budget. Just make sure that the tracker crawls often and will maintain historical data indefinitely.
Here’s a look at my rank tracker for one of my sites:
You don’t need to track all of your keywords. That would get pretty costly.
We just track our “money keywords” - which is an easy way of defining the primary keyword for each article on our site, or any keyword that has buying intent.
It will take some time for your first rankings to show up, so be patient. Depending on how hard I’m working on a site, I will typically see keywords start to show up in the top 100 results within 1 to 3 months from the launch of the site.
Remember, building a niche site should be treated as a business. If you’re looking for a hobby, there are plenty others out there that won’t make you lose your hair.
When the money starts to flow, you have to tell yourself that it’s not time to go on vacation.
Instead, you should analyze your revenue and determine the best way to reinvest that money back into your business. You can’t fund the site out-of-pocket forever, so you’ll need to use the revenue generated by the site to reach your goals.
How you reinvest your revenue should be determined by what is taking up the most of your time. You should always try to free up your time so that you can work on higher-level tasks, instead of doing the nitty-gritty grunt work.
You can free yourself of that soul-sucking work through outsourcing.
Here’s a few ideas of what you can outsource once your site is earning revenue:
- White hat outreach link building
- Content creation (I know a great company)
- Graphic design
- Keyword research
- Content strategy
- Content editing
- Photo / Video sourcing
The list can go on and on…
The bottom line is that you should reinvest your revenue in order to reach your goals faster.
Dan and I knew from the start that we’d be reinvesting everything until we reached our goals.
Once we were making enough to cover our monthly content and link building costs, we started to take a slight profit to put food on the table.
Why Sell, and Should You?
This is ultimately a decision that will be determined by your goals.
Selling your niche site has a number of benefits. You can get up to 3 years of net income upfront in exchange for giving up ownership. That’s AWESOME.
All that money will allow you set new goals, whether it’s building a new site or living out a lifelong dream.
Getting rid of the site also means that you no longer have to be handcuffed to the maintenance it requires. Letting the site go also means that you avoided bearing the brunt of an algorithm change or other type of realized business risk.
...there are plenty of reasons to hang on to your niche site too.
If you’re dominating the niche and have no reason to fear competitors outranking the site, then that monthly revenue looks pretty attractive.
You may have hit your goal, but there might now be an opportunity to set a new goal to expand the site and increase your monthly revenue substantially. Believe it or not, it’s completely reasonable to set a goal to make $100,000 in revenue per month once you’ve proven that the site is viable.
So, don’t rush through this decision. It takes a lot of blood, sweat, and tears to get to this point.
It was our goal from Day 1 to sell our site.
We had already built out 3 new sites by the time the first niche site was ready to be sold. We needed to flip the site so we had revenue to grow the rest of our portfolio.
How to Sell Your Niche Site
Like just about everything else in the world of digital marketing, selling your niche site is somewhat of an art.
The remainder of this case study will cover how to sell your niche site, and the experience we went through while selling ours.
Choosing a Broker
There are a number of avenues you can choose to facilitate the sale of your niche site.
If you’re site is going to sell for $20,000 or less, your best bet is to use a marketplace like Flippa or Empire Flippers.
Flippa (the larger of the two) is basically the “eBay of websites.” You post a listing for your domain name or website, and interested members of the site will bid on your offering until the predetermined end date is reached. The highest bidder at that point will have won the auction.
The fees for a marketplace like range from 10%-15% of the sale price, plus a small upfront fee. You operate the entire sales process yourself.
On the other hand, if your site is going to sell for over $20,000, then you will want to enlist the services of a broker to guide you through the nuances of a high dollar transaction.
These broker’s offer white-glove service, and you can expect to pay up to 15% of the sale price in exchange for their help. There are usually no upfront fees.
A WORD OF WARNING…
Not all brokers are created equal. They all want your money, and they will all say that they’re “the best.”
The biggest difference between brokers is their network of buyers. Some brokers have a network that loves to buy low to mid-priced sites. Other brokers specialize in high-end sales.
But...here's the catch:
None of them will tell you this.
An unscrupulous broker with a low-end buyer network will happily take your site and sell it for hundreds of thousands less than what it’s actually worth. They just want the sales commission.
If you don’t have the experience to know what kind of buyer network your broker has, you could end up making a life-altering mistake.
We wasted a number of months listed somewhere else (which would be a whole other story) and would have received much, much less had we not switched to FE International. Not all brokers are created equally!
To combat this, make sure you get a detailed account of their process and ask for references from past clients from your potential broker. You’ll want to specify that you want references from “one time buyers” as the broker will probably try and put you in contact with their regular buyers who are in cahoots with them.
A buyer that only made one or two purchases through the broker will give you a much more honest review. Also check for similar sales they have completed at your level and their overall success rate. Many brokers claim a very high success rate but actually have a level much lower than that (lots of listings is often a sign of a low quality broker).
- Pro-Tip #1: Just because a broker markets themselves all over social media DOES NOT mean they’re good.
- Pro-Tip #2: Do not work with brokers that overvalue your website and undercut on commission.
Because of the anticipated sale price of our site, we opted to go with a broker over a marketplace.
After much deliberation, Dan and I decided to engage FE International (“FE”) to sell our website. We needed the expertise they could offer, as this was the first time we would be selling an asset of this magnitude.
We did our due diligence, too, and made sure that they had the type of buyer network we were after. They did, and do!
In the following sections, you will learn how we:
- Determined our sites value
- Created our listing with our broker
- Due diligence before listing
- Pitched the site to potential buyers
- Negotiated with interested parties
- Closed the deal
- Got paid
Keep in mind - this was just our singular experience. Your approach may be different!
DETERMINING SITE VALUE
We quickly learned that niche websites typically sell for 24x to 48x multiple of your most recent monthly net income.
Net Income * Monthly Multiple = Site Valuation
Now, there are several other variables that will determine the multiple your broker uses to value your site. The FE team carefully went over several variables with us to determine what multiple applied.
Some variables that affect valuation include:
- Business model
- Owner input
- Owner efficiency
- SDE over different time frames
- Backlink profile quality (inc. PBN related-risk)
- Concentration risk
These were just some of the variables we encountered. One of the things we liked about FE was the complexity of their valuation model. I would imagine that each sale will have it’s own nuances that need to be analyzed to determine the multiple that is used.
CREATING THE LISTING
After a lot of back-and-forth, we agreed the listing price, best time to go to market and gave the FE team go ahead to prepare sales materials and list.
We immediately dove into some initial exploration questions so that the team had all the info they needed to answer the most common questions from prospective buyers.
There were around 100 questions. The type of things we went over included:
- Business history
- Business operations
- Content strategy
- Marketing strategy
- Historic and current financial performance
- Traffic profile
With this information, they went ahead and made a GORGEOUS prospectus for potential buyers.
I mean...it was beautiful!
I loved seeing my business on a prospectus like that. It gave us the feeling that we “made it.”
Here’s a screenshot of the summary page:
We had to cut some of the detail out… but you get the idea. The entire prospectus was 23-pages in length!
Once we approved the prospectus, we completed FE’s pre-listing due diligence process.
A listing page was created for us and we officially “launched” once this was complete.
DUE DILIGENCE BEFORE LISTING
Once the prospectus was complete, we approved the materials and completed FE’s pre-listing due diligence process.
We were invited to FE’s secure data room, which acts as a repository for verification documents and an audit trail for the entire sale process.
This was an important step as we were able to verify upfront the claims we made in the questionnaire, and gave FE the opportunity to spot any inconsistencies which could give a buyers leverage when making offers.
Our documents were well kept so we had no issues, but this was a very valuable step to ensure we had not missed anything that could harm the sale.
Once approved, we were ready to list!
PITCHING TO BUYERS
At this point, the powerhouse that is FE International took full control. Dan and I had done everything we could do, and it was now up to the brokers to go out and find us a buyer.
We were told that our listing was sent out to a number of segmented email lists that make up their buyer network. We were told that the listing would be first sent to a pre-marketing list of the most active buyers, then to a larger list of buyers interested in our niche and if required, to the entire list of 15,000+ buyers.
All was silent for about two weeks after we launched, mainly because the team was hard at work pitching our business to pre-marketing and niche buyers.
Then, on one particularly beautiful morning, we started to receive an influx of questions and requests for buyer meetings.
This is when it started to get really exciting.
We received around 600 inquiries on the listing (all handled by the broker) and these were then shortlisted to 5 or 10 which seemed most serious and 3 to 4 “buyer meetings” were arranged.
The buyer meeting is just what it sounds like; a quick 30-60 minute conversation between the potential buyer and the seller. Our broker sits in on the meeting and acts like a mediator to expedite the process and clarify things if either side was getting confused.
These meetings are a tricky thing. The potential buyers will do anything they can to get you to reveal certain information regarding your site and your processes. You don’t want to give up too much info, but you also don’t want to leave them wondering. The broker team prepared us for the type of question to expect, which helped.
We went through several rounds of these meetings. Each time, one of the potential buyers dropped out of the race. Not because of anything we did, but because they simply weren’t the right fit.
Eventually we started receiving hard offers. Some of them were low-balls, but some were very reasonable. We responded to each offer individually, giving them our full attention.
There will be a lot of back-and-forth.
We were “doing the dance.” A potential buyer would make an offer citing certain reasons why it’s below our asking price, and we’d respond via FE with a clear explanation as to why we were confident about our asking price. Of course, we provided plenty of proof to back up our claims.
Eventually, we were working with a single potential buyer that seemed like the right fit.
After many discussions, we settled in on a sales price. The listing was only in the market for 18 days and the price was just 1.95% below our original asking price. We were very satisfied!
At this stage, a Letter of Intent (LOI) was provided by our broker and it was signed by both parties to formalize proceedings.
Now, we weren’t out of the woods just yet. It was now time to complete the buyer’s due diligence period.
The successful buyer was invited into FE’s data room used for pre-listing due diligence. The use of a secure data room was essential as we were sharing confidential information - providing this information over email, Dropbox, Google Docs or similar is not secure.
A deal room can cost tens of thousands a year to run, so it is definitely worth asking a broker upfront if they have one.
All through due diligence process we had to prove every single claim we made in our prospectus. If you’re not a good record-keeper, you better learn fast because we had to provide data from several points over the 2-year life of the site.
Types of info that was requested:
- P&L reports
- Bank statements
- Affiliate dashboard screenshots
- Process guides for daily / weekly / monthly maintenance
- Access to our analytics dashboard
It wasn’t easy initially…and I thought I kept GREAT records. You just have to be patient with it and be ready to go with the flow.
Fortunately, we had prepared a lot of this in the pre-listing due diligence and we knew everything checked-out. The buyer was happy to proceed after a week.
CLOSING THE DEAL
The closing process for selling a website is just like the closing process of selling a home. There’s a ton of little details to review that are super important.
This is more or less another negotiation process for all the “little stuff” like:
- Dates and amounts for milestone payments
- Contingencies if the buyer misses a payment, or if the seller doesn’t follow through on a promise
- Every other nitpicky contractual detail that you can imagine
This process WAS taxing. It took a lot of mental fortitude to not rush this process and stay focused on the details.
FE prepared an Asset Purchase Agreement (APA) that we used. Using a contract is essential to protect both parties - regardless how big your site is ALWAYS have one. There are many issues if you skip this step or try doing it yourself. If you do not feel comfortable, you should have an attorney review the agreement before signing.
In our case, we found a few issues in the contract that were then negotiated and agreed with the buyer. So, we were very happy that we put in the effort.
Once the contracts were signed, it was time for both sides to put their respective assets into escrow. This was done to keep both sides honest.
The way that our agreement worked was that the buyer took full control over the site immediately, and we were paid out approximately 80% of the sales price upfront. It took 16 days from LOI to being paid out by the escrow service.
The remainder of the sales price will be released to us over a specified period of time and FE will keep track of this. This earn out period is in place to ensure that all of the claims we made to the buyer came to fruition.
The End is Here
This was an experience, to say the least.
Dan and I received an ever-enlightening crash course in high-end website sales. The knowledge we gained will be invaluable to our future…but, I’m happy to be back building websites instead for a while!
If you have any questions or comments related to this case study, we highly encourage you to join us at BuilderSociety for our official Ask Me Anything (AMA) related to this sale!