What Kind of Web Business Do You Want to Own?

Not all sites are created equal, and there is actually not a single appraisal system that can accurately tell which kind of sites that are more valuable than the others.

The saying, “A site’s worth is as much as what you are willing to pay” is true to the core; you can’t dictate how a site is priced on the market – the market will determine whether the site is worthy enough to be tagged with a certain price tag.

Of all kind of sites, there are actually two major ‘classifications’ in which sites can be grouped in: Revenue-driven sites and potential-driven sites. Let’s explore a bit about each.

Revenue-driven sites

Obviously, revenue-driven sites are those that are generating revenue, most likely on a regular basis. Such sites are built with an intention to make money – e.g. eCommerce sites, eBook sites, service provider sites, etc.

This kind of sites is a keeper – meaning, you can have all the profits you can enjoy while keeping up the development of the sites. Some site owners, however, don’t think that keeping profitable sites for too long is wise – Read Flippa’s blog post about the reason why people sell profitable websites.

What’s the value of such sites? Depending on the niche of the sites, they can be valued at anywhere between 3 to 20 times monthly revenue. I’ve seen some sites were sold for less than 2 times monthly revenue, while others were sold for more than 40 times monthly revenue.

Potential-driven sites

If you haven’t noticed, not all sites are revenue-driven – or in other words, not all sites are made to generate revenue. However, let’s make a simple clarification here.

In site flipping marketplaces, there are listings claiming, “a site with great earning potential, up to $2,000 a month” and such. The truth is, such site is new, so new that no revenue can be mentioned at all. Sellers always use the word “potential” to mask what their sites really are: New sites with unproven prospects; they could either make it or not, which can actually be found by the buyers.

What I mean by potential-driven sites are those that bears great monetization potential but not yet implemented any monetization methods for various reason – and believe me, not all webpreneur want to generate any revenue from their startups – they aim for a bigger reward: Grow the sites in quality, user base and potential in such a way that they can eventually sell the sites at high-end price tag.

So, what kind of web business do you want to own?

Depending on your resources, the safest bet would be to own sites that have a good earning potential to cover overheads. If you pursue potential-driven sites, just make sure you have the funding to support the operating costs.

All is coming back to your vision in webpreneurship: Are you going to make money via cash flows or capital gains? If the former, invest in revenue-driven sites. If the latter, invest in potential-driven sites.

How about you? Which kind of website do you own? Do you prefer revenue- or potential-driven sites? Please share your opinion.

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