Yesterday it happened again. An old time friend called to get my opinion on an offer that seemed too good to pass up. He has been wanting to start an Internet business so that he could work full-time from his home office like I do. He had just become aware of an Internet business that was for sale that seemed like it could finally make his dreams come true.
I had never heard of the web site that my friend wanted to purchase, but there are some tricks and tools that I’ve picked up over the years that could quickly be used to determine if this online business could possibly be all that it was presented as being. I’m no technical guru, but I have a nice list of favorites stored away for just such a task.
Here’s the list of what I told him to check:
#1. The domain name’s popularity. Go to Google.com and do a search on the domain name. Are there any listings for this web site in Google? Are there many links from other sites that link to the web site? Domain name popularity can take a long time to build up, and a domain name with good popularity can be very valuable regardless of the web site that is connected to it.
Also important, if there are no listings for this domain name in Google, it could be the result of being banned by Google, which would make it very difficult to ever get listed there. This would greatly decrease the value of the web site.
Try the same search on Yahoo.com and MSN.com . If the domain name doesn’t have good listings in any of these three search engines, then it would be hard to get a steady flow of visitors to the web site without paying a premium for the traffic.
Another favorite tool of mine is found at www.FreeWebSubmission.com . It is their Link Popularity Checker , which will check the number of links to a web site across most of the big search engines very quickly.
Questions to ask:
Does this domain name have any value by itself or could a newly registered domain name have the same value? (for much less $$$!)
#2. The domain name ownership. Go to Internic.net to perform a whois lookup to see who the domain name is registered to. Make sure the owner is the person who is selling the web business!
Here you will also find the domain registrar that holds the domain registration. Go to that registrar and perform a whois lookup there. This will tell you how long the domain name has been registered, and when the domain name will expire.
Another point of caution: In a practical sense, you do not own a domain name until you have exclusive access to the domain registration account. If you don’t have the password to manage the domain name, you can’t do anything with it. If someone else has a password to your domain name account, they can easily and quickly change the name of the owner, and even transfer it to a different registrar, not to mention that they have the ability to change the password, locking you out.
You can often take the DNS settings found in the whois information to determine who the web host is. Simply remove the sub domain off of the DNS name (often DN1. or DN2.) and enter it for a web address. This will usually take you to the home page of the web host.
Questions to ask:
Is the person selling the web business listed as the owner of the domain name?
How long until the domain name registration expires, and how much will it cost to renew?
Is the domain name registered with a registrar that you are comfortable with?
#3. Web site traffic. A great method of verifying the amount of traffic that a web site receives is through Alexa.com. Alexa maintains traffic records through the many people who surf the web using the Alexa web browser toolbar. Alexa ranks each domain name in terms of how it compares with other web site traffic, so the higher the number the less traffic the web site receives. For example, right now Yahoo.com is ranked #1, eBay.com is ranked #5, and my personal family web site is ranked 2,834,123.
The majority of web sites have an Alexa rating in the millions, or none at all. In practical terms, a web site must have an Alexa rating of 100,000 or less for it to be a serious web business. I have personally never seen a web site earn a profit with an Alexa rating over 100,000. If you are ever told otherwise, beware.
Another thing to note is that Alexa shows a graph of web site traffic over a period of time, up to 2 years. This is good to verify the web site’s growth. If the graph shows very sporadic traffic, this could be an indicator that the web site traffic is coming from a pay-for-traffic service, such as through popup advertising or (heaven forbid) spamming.
New on the scene is MetricsMarket.com , which has a great new tool for estimating the visitor sessions a web site has had in the past 30 days. Alexa.com and MetricsMarket.com are great for checking out the value and history of a web site when you don’t have direct access to the actual web server statistics.
Questions to ask:
How many real visitors is this web site getting?
How consistent is the web site traffic?
How long has the web site been receiving substantial traffic?
What will have to happen to continue receiving the same level of traffic?
While we’re talking about the history of the web site, Alexa links to a feature called the “Way-Back Machine". This works under the same principle as cached pages at Google and AllTheWeb.com . Use these services to view what the web site looked like years earlier. This is often the only way to verify the history of a web site, and it works great! I really don’t know why this feature doesn’t get more attention on any of these web sites.
#4. Web site hosting. Something a web site buyer often overlooks is the type of hosting that a web site requires. There are several different platforms that can host a web site, and often they are incompatible. Go to www.NetCraft.com and perform a “Webserver Search" to discover which platform the web site is hosted on. This can even tell you how long it’s been since the web server was rebooted!
Next, go the www.Whois.sc web site. Perform a “Domain Explorer" search on the domain name and you will see how many other web sites are hosted on the same server, using the same IP address. With a membership there, you can even find the history of ownership of a domain name, and the names of the other web sites hosted on the same web server.
Questions to ask:
How much are the hosting fees associated with the web site?
Is the web site hosted on its own server, or at with a “bargain basement" host along with a thousand other web sites on the same server?
#5. Web site profitability. This is perhaps the hardest to verify. You will need access to the sellers accounting books. Different situations call for different levels of verification, but let me say this: I have often seen “proof of income" in the form of a screenshot of a balance sheet, such as an account balance at PayPal.com. This is certainly no proof of anything, as graphics can be doctored quite easily.
I’ve seen many web businesses for sale with the owner stating that even though the web business is very profitable, he or she simply no longer has the time to run it. It generally takes more time to sell a web business than it does to run one for a month. Don’t let your eagerness to join the work-at-home club cloud your common sense. Steer clear when the offer just doesn’t sound quite right!
Also, all major web businesses will accept payments through standard banking merchant accounts. This is different than PayPal. You will need to determine if such a merchant account exists, how expensive it is and how difficult it will be to switch it over to your name.
A good question to ask when buying a web site is the same question to ask when buying anything from any individual: Why is the seller selling? Good web businesses are in high demand. People don’t just sell a good web business because they are tired of running it, or because of some heartfelt desire to see others succeed. The World Wide Web attracts all types of people, and navigating the pitfalls of investing in something that is often very intangible can be extremely difficult.
After walking my friend through these few checks, he decided that this web business that he had been presented with wasn’t exactly what he had been led to believe that it was, which he took as an early indication that he should pass on this one. Now my friend will be better prepared next time when an unbelievable opportunity comes his way, and hopefully, so will you!
Bruce Horst is not much of a writer, but he does work with some of the most incredibly talented writers around, working to get them the promotion they deserve.
He considers himself a geeks geek, and with his new iPhone has been quoted as saying that he may never be bored again, though he still doesn't really enjoy talking on the phone very much.
Good advice. I purchased a few websites before checking them out when I first started online, but I was lucky, and did not pay very much for them. So I was able to develop them with time and a small amount of investing. Respond to this comment
Great Information! Very nicely laid out and easy to understand. It is exactly what I was looking for, because I too have just started my own web business.
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