You absolutely have to know what you are buying, and should have plenty of previous experience building and running profitable web sites.
95%+ of developed sites I have seen for sale have one or more of the following problems:
-no visitors, its just a template
-completely relies on free search engine traffic, often from a handful of terms. As MJ points out, a few small changes at Google and you now own something throwing off only 5% of its revenue.
-content violates trademarks and copyrights, often user unloading the site quickly after receiving a C&D.
-revenue source extremely volatile. Example: Last year there were guys raking in $50k+ a month because they used Yahoo's new PPC ads with images placed next to them. This meant ads would bring in over $1 a click in revenue when the traffic was worth around 1-5 cents. After getting kicked out of Yahoo's program a lot of guys tried unloading their sites to novice buyers, in some cases for six figures.
-market is volatile. The "backbone" of internet profits for the last 10 years -- porn, pharmaceuticals, and gambling have all undergone significant declines. Just this year we've seen two very mainstream revenue pillars, dating & mortgages take a massive hit as well. Many people are shocked to see how quickly a market can turn around. If you buy into a website operating in a single industry your investment can disappear very quickly.
I would suggest having a solid understanding of the market you are going to become involved with, presuming its a sizable purchase.
-Site is labor intensive and low revenue. From what I've seen, most sites that are worth money fall into this category.
If you are buying a website, there are two big things that often make the purchase worthwhile -- the domain name (generic dot com) and the existing user base. Truth is, most sites for sale can be easily replicated. You need to look at that possible purchase and ask yourself why you need to own that specific site rather than copy the idea.
95%+ of developed sites I have seen for sale have one or more of the following problems:
-no visitors, its just a template
-completely relies on free search engine traffic, often from a handful of terms. As MJ points out, a few small changes at Google and you now own something throwing off only 5% of its revenue.
-content violates trademarks and copyrights, often user unloading the site quickly after receiving a C&D.
-revenue source extremely volatile. Example: Last year there were guys raking in $50k+ a month because they used Yahoo's new PPC ads with images placed next to them. This meant ads would bring in over $1 a click in revenue when the traffic was worth around 1-5 cents. After getting kicked out of Yahoo's program a lot of guys tried unloading their sites to novice buyers, in some cases for six figures.
-market is volatile. The "backbone" of internet profits for the last 10 years -- porn, pharmaceuticals, and gambling have all undergone significant declines. Just this year we've seen two very mainstream revenue pillars, dating & mortgages take a massive hit as well. Many people are shocked to see how quickly a market can turn around. If you buy into a website operating in a single industry your investment can disappear very quickly.
I would suggest having a solid understanding of the market you are going to become involved with, presuming its a sizable purchase.
-Site is labor intensive and low revenue. From what I've seen, most sites that are worth money fall into this category.
If you are buying a website, there are two big things that often make the purchase worthwhile -- the domain name (generic dot com) and the existing user base. Truth is, most sites for sale can be easily replicated. You need to look at that possible purchase and ask yourself why you need to own that specific site rather than copy the idea.