9 Traits Of A Million Dollar Website

Most people will never have the luxury of starting a business with a billion dollar bankroll or living the life of luxury like Sir Richard Branson.

However, hitting the coveted million dollar mark when you decide to sell your business could actually be closer than you think.

While getting to the 7-figure mark may not necessarily be easy to do, it’s not completely impossible. 

Here are 9 traits of million dollar websites.

#1 – Owner Benefits & Cash Flow

While it may seem obvious to most people, the more revenue (and profits) that your business generates, the more attractive it is going to be to investors.

To hit that coveted 7-figure mark, you’re going to need to generate revenues above $300,000 per year.  As with everything else, though, there could be exceptions based on how you have structured the business and the valuation method changes.

#2 – Proven Track Record

You’re going to be hard-pressed to find a business that’s selling for $1 million, or more, that hasn’t existed for more than 2-3 years.  When it comes to online businesses, becoming the next overnight success is rare, even if it’s pushed as a reality on a regular basis.

If you’re looking to sell your business for 7-figures or more, you’re going to need to have a few years of consistent results that you can show to an investor, and that the investor can easily verify.

#3 – Growth Trends

Whenever investors look into buying a business, they’re going to be looking at the traffic and revenues.  This is another area where time plays a major role in the valuation.

You want to be able to show investors consistent upward trends in the growth of the website.  If you have downward trends, you should be able to explain what happened and what you did, or will do, to address those downward trends.

If you can explain away the downward trends, and focus on how the business has consistently shown growth year, after year, you’ll be able to ask far more for the business, and investors will be more ready to offer a high valuation.

#4 – Transferability

Every business ever built can be bought and sold.  However, one area that many business owners fail to properly address when they’re thinking about selling their business is how easy the business is to transfer to the new owner.

Transferability refers to being able to move your accounts over, transfer your agreements to the new owner, and have systems and documentation in place that allows your new owner to jump into your role and continue growing the business after you’re gone.

In general, the less work that your investor has to do when they buy the business, the more they’re going to be willing to offer to actually buy the business from you.

#5 – Growth Opportunities

Just because your website has hit that 7-figure valuation mark, the website shouldn’t be completely tapped out in the market.

If your investor can’t keep growing the business, and you can’t properly identify new growth opportunities, it doesn’t matter how much your business is worth — getting an investor to offer to buy the business from you becomes substantially harder to do.

Investors aren’t buying your business for the profits it is generating right now.  They are buying it for the ability to grow it once they’ve acquired it, and get a return on their investment sooner, rather than later.

#6 – High Barriers To Entry

A high barrier to entry is incredibly important to investors.  Just about anyone can build an online business, but it takes something special to build a unique business that’s hard for competitors to knock off the perch.

If someone can come behind you and build the exact same business, either stealing your market share or completely driving you out of the market, there’s nothing stopping your investors from doing exactly that.

#7 – Low Workload

This goes back to making sure the business is transferable, and what investors are looking for whenever they’re buying a new business or thinking about buying a new business.

Very few investors are going to be willing to spend $1 million, or more, to purchase a new job for themselves.  They want to buy a business that has already made it past the building stages, and has shown stability and the ability to generate revenues with little-required effort.

#8 – Multiple Income And Traffic Streams

Another factor that determines how attractive your business is to investors is how many revenue streams and traffic sources you’re tapping into to generate the revenue you’re generating.

When you’re putting all of your eggs in one basket, such as relying entirely on Google to send traffic to the website, investors are going to look at the business as risky.  At any time, Google can update their algorithms and knock out a large portion of your traffic.

Your business should never be entirely reliant on a single traffic source, or a single source of revenue.  If it is, and you expect to value it at 7-figures, you’re going to need to diversify your traffic sources and implement new streams of revenue.

#9 – Solid Financials

If you have financials that are inaccurate, sloppy, or hard to understand, investors are going to see your business as risky, and it will be hard for them to verify the claims that you’re making during the negotiation process.

Before you list the business for sale, you need to polish your financials.  Make sure they’re incredibly detailed, accurate, and easy to read.  Not only will it help the sale process move forward more smoothly, but it will help you justify your asking price.

At the end of the day, every business is different and what makes one attractive to an investor over another plays a major role in how much the business finally sells for.  If you’re trying to sell your business for $1,000,000, or more, you’ll need to address each of the traits I’ve listed here.

 

About Your Guest Blogger: Jock is the founder of Digital Exits, an online brokerage service. Jock has been featured in Forbes and contributed to numerous websites and podcasts. He specializes in appraising and buying/selling online businesses and enjoys helping other entrepreneurs do business online.

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