Valuation of Web based business

[UncleWiggy]

I am researching the purchase of an established web site. Are there any guidelines on valuation. Normal assett valuations dont apply as what you are purchasing is essentially "fresh Air" & good will however the main fact that I am interested in is that the site already has a good reputation and customer base and generates 50,000 unique visitors a month and some 500,000 hits a month?

Any advice on this subject either here , or via email or links to resouce would be appreciated

Barry Hopkins
aka Uncle Wiggy

 

[Rob Holmes]

Hmm tough one, personally I'd look at the monthly income it generates, subtract the monthly outgoings for the site (domain name, hosting, adwords etc etc) and get a really clear view on how much it would put in your pocket each month if you didn't develop it any further.

Be very careful as visitors and hits are easily manipulated, you'd need to see the logfiles over a few months to verify the origin of the hits but even then you've got to be careful.

The real value is the customer base of course!

If you can establish a value for this then IMHO that will form the vast majority of the value of the site.

By site I take it you mean 'business' or will they be retaining the customers?

Rob

 

[SillyJokes]

Well I wouldn't be paying £70K for it, if that's what you are asking

Matrixx is right - I have yet to be told the correct amount of traffic a site gets.

try using http://www.alexa.com to check it's status,

have a look at

http://www.metricsmarket.com/ to see what they think the traffic is - it's quite accurate.

look at marketleap.com for inward links, look in dmoz to see if it's listed there.

Now, do you think you could improve this site and get it to make more money?

 

[buying_it]

Silly jokes last point is the key one - if you don't think you can improve on the current service then that site/business is going to decline over time.

You need to have your next three steps and improvements laid out and each time you complete one you need to generate another one.

Is this the edirectory business you posted about in another thread?

In which case you are going to need very innovative services/offerings as that market place is getting very crowded.

take a look at www.touchguildford.com - they look like a great edirectory - yet I know several advertisers that use it and get very little business from it.

Andy

 

[UncleWiggy]

Thanks for the advice. Much appreciated. I will expand and respond next week in full !

Barry