Midascode | Buy & Sell Websites

We have all had an idea for a website or web business that we felt was a killer idea. Some of us decide to turn that idea into a multi million dollar business (Google, Facebook, Flickr, Myspace), and the majority of us forget about it and then regret it later.

But in between these two ends of the spectrum is something far worse… it is the people that think of an idea, create the website, and then realise that the idea has already been done many times, and success is almost impossible.

At Midascode we get a lot these cases, people contact us with an online auction website they spent $10,000 on, and they then realised that there was a little thing called eBay, so their site never got off the ground. To make matters worse, they often want to sell for more than $10,000 to “cover the development costs”.

This angers and upsets me in equal measure. I don’t like to see people fail, I certainly don’t like to see them lose money, but at the same time, it is clear that these people have rushed into creating their website without doing any research.

Which begs the question: should development companies have the morals and good faith to tell such clients that they are wasting $10,000?

It is easy for us to laugh and joke about people who want to create a search engine for $500 to compete with Google, or a $10,000 site to compete with eBay, but many of you have spent a lot of time on the net, you know the rules, and the unwritten rules, you know what works and what fails, you know what adverts not to click, and you know not to show your willy via webcam to a guy called KinkyJoe (ok, perhaps that was just me then?!?)…. but remember that each and every day there are thousands of people who are using the Internet for the very first time, these people don’t know the rules and unwritten rules, they barely now how to load the Internet browser.

Perhaps there should be a one year buffer period, where nobody is allowed to create a website or web business until they have been online 12 months.

For instance, take my mother…. no, please… take her!

She started using the net recently, using the IM username: Deans.Mum (bless)

The other day she contacted me and was furious about the fact that on the net, people pretend you have won things, but really, they say it to every visitor. I laughed at this because I have had 10 years of seeing such banners and pop-ups, but she hasn’t, and from time to time we have to remember that we were just as naive when we started online.

We all make mistakes, for me, “mistake” is just another word for “experience”, but until you have got your Internet “experience”, it may be best not to invest $10,000 into an idea that has had no market research, and what’s more, if you do make this big mistake, please don’t use us as your “get out of jail free card”, we can get the same $10,000 site developed for $2,000 and we are “experienced” enough to know that it would take millions of dollars in promotion to launch an online auction site these days.

Rant over.

For all of the people reading this who are new to the Internet, I would like to share one vital piece of information with you, one nugget of info that will change your lives:

****Congratulations, you are the 1 millionth visitor, you have won a prize, please send $100 to INeedMoreInternetExperienceBeforeISpent10kOnMyIdea @midascode.co.uk to collect your cash.****

Have you ever wondered who owned iphone.com before the iPhone was invented?

No? Perhaps it is just me then.

I can reveal that this is an archive of the iPhone.com website prior to Apple purchasing the domain:

iPhone website in 1999

It makes you wonder, perhaps you are currently the owner of a domain that could be worth millions in the near future. Perhaps Apple will create a product called “Midas Code”

We can only dream.

If you have ever considered buying or selling a website, then I urge you to take the time to read this article/rant.

More and more people are looking to buy existing websites as a way of saving time and money, in theory this is a perfect model, webmasters who no longer have the time to run their site, have gotten bored of their site, want to cash in on their site etc… have an outlet in which to get a nice chunk of cash for their efforts.

In some ways this is the equivalent of a get out of jail free card. The webmaster starts with a grand idea, gets excited, creates the site, the site flops, webmaster sells, recovers cost of development etc…

On the other side of the coin, site buyers are able to save huge amounts of time, market research and promotion, by letting someone else do the hard work, and then paying them for their efforts.

This should be a win/win scenario, and often it is… but there is one issue that seems to be rearing it’s ugly head over and over again: The Webmaster Delusion.

The Webmaster Delusion

The Webmaster Delusion is basically the mindset of webmasters who own websites and are looking to sell. I don’t mean to stereotype, but the vast majority of site owners that we deal with on a yearly basis (a LOT), have the delusion of thinking that their website is the new Myspace or Million Dollar Homepage. However, without fail, these sites are often amateur failures that are worth no more than a few hundred dollars.

Today I would like to pose the question to everyone reading this… WHY? Why do webmasters consistently over-value their websites to crazy proportions?

Midascode.co.uk is an industry leader in site flipping, yet we don’t have an exact answer to this question.

How can a $300 website be seen as being worth $40,000? Yes, you read correctly… $40,000

One obvious answer is that the site owner is the owner, and therefore is bias. But car owners don’t do the same, you don’t see small, knackered old cars being sold at Porsche prices. It would be crazy to do such a thing. Yet in the world of webmasters, it is common practice for a car with no tyres to be valued as a gold plated limo.

a prime example of delusion

Recently we had a great example of this, we knew a site owner who had a site with approx 150 visitors per day, and the site was making almost no money, the design was poor, and didn’t have many links. So we valued the site in the low end of the spectrum, let’s say for the purpose of this example, we would be willing to pay an absolute max of $800.

We discussed the site in detail with the owner, and then we asked him to tell us what sort of price range he was considering… for privacy reasons I won’t give the exact details, but his valuation was over $70,000

His twisted logic was based on a value per visitor of $250, despite the fact that he was making no money from the users.

In reality I could have achieved this same traffic via PPC for less than 25c per visitor, which would have given a value of $700 (much closer to the actual value)

So how on earth can an owner of a $700 website, demand $70,000?

I would love to hear your thoughts on this… if it was just a few people, I would put it down to lack of knowledge, but this represents the vast majority.

Also, it is worth noting that he contacted us.

We all know that the real value of something is whatever anyone is willing to pay, but when you have been in the site buying and selling business as long as Midascode, you develop a strong sense of a site’s value, and in most cases we are correct in our assessments.

So once I again I must pose the question… why do the vast majority of webmasters do this?
I have seen life changing amounts of money being offered for websites, and the owner will refuse and demand x100 more.

Why would someone with an average income refuse such a large amount of money?

I have a few beliefs on why there is such delusion:

What causes the delusion?

1) They have a personal interest – Webmasters often put huge amounts of time and effort into sites, in the vast majority of times, this time and effort is largely wasted, and is of no value in the real world. But the webmaster doesn’t see it that way, as it was THEIR time and THEIR effort.

2) They are bias – Many webmasters are blind to the mistakes they have made with their sites. They are convinced that the $1,000 they spent on directory submissions will add $3,000 to the site’s value, when in reality it has done more harm than good. So getting a logical valuation is always going to be trickier.

3) They lack basic business knowledge – Again, I don’t want to stereotype, but if a site is not making any revenue, then that alone is enough to show that perhaps you are not dealing with the brightest business mind in the industry. I often find the sites that have been complete failures, have the craziest valuations. So perhaps it is just a lack of knowledge that is the cause?

4) A lack of foresight – Here is something we hear very often: “my site makes $50 per month, so I could just keep it for 10 years and make $6,000, so my valuation is $7,000″

So many webmasters presume that their sites are only going to get better with time, despite the fact that many of them have long since given up on the sites. In reality, the sites are going to rot, and revenue will decrease each month. Also, the sites are susceptable to changes in Google rankings, new competitors, hackers, spammers, loss of interest in the industry, a web 2.0 bubble crash.

To presume that a site is only going to improve, shows a fantasy style of thinking. In reality, any site on the planet could potentially be worthless in a years time. It only takes a large lawsuit, a determined hacker, a huge Google change, or a web bubble crash for this to happen. Yet webmasters are happy to predict perfect conditions for the next 10+ years.

Your thoughts

Have you bought or sold websites? Have you experienced any of the above? Can you relate to any of the above?

We would love to hear from you. This article is not a rant, we are genuinely looking for answers to this delusion. We feel a lack of knowledge is the main factor for this delusion, and we are trying to do something about that by providing the largest source of quality site buying and selling information on the net.

We look forward to your thoughts.

Midascode

Browser Compatibility and Accessibility Tools

If you were creating a website for a city where the residents spoke 3 different languages, would it not make sense to make a site that used all 3 languages?

Of course it would!

So why is it that so many websites don’t cater for many of the popular web browsers?

If you are considering buying a website, why not see if browsers such as Firefox can use the site? If they can’t, then there is huge room for improvement for you.

Watchfire WebXACT: WebXACT tests the quality, accessibility and privacy of single webpages.

Wave 3.0: Wave 3.0 tests website compatibility with WCAG 1.0 and Section 508.

Browsershots: Use Browswershots to see how any website looks in various browsers like Firefox, Safari and Iceweasal.

Ready.mobi: Ready.mobi lets you test any web page to see how it will look on mobile phone browsers.

Note: These Browser Compatibility and Accessibility tools can also be used to keep an eye on your competition.

These “Financial Reports and Financial Research Tools” can be used to:

* Find out more about your competitors
* Research a niche
* Evaluate a website prior to buying it

In terms of buying websites, if you know that your competitor is financially broke, then this gives you an edge during the negotiations.

Credit eValuator Report: The Credit eValuator Report gives information on creditworthiness and payment history. Using this tool, you’ll be able to find out if your competitor is struggling or flourishing.

Yahoo! Finance: If your competitor is a publicly traded company, you can check out stock quotes and analysis on them using Yahoo! Finance.

BusinesScope: Use BusinesScope to directly compare your financials and credit with your competitors. This report is good for a year and updated quarterly.

Public Relations
If you are buying a large site, then it will be important to not only discover if they have a positive image in the industry, but also, you will want to know exactly how they got to where they are, thus allowing you to learn from their mistakes and positives.

Below are some public relations research tools and websites that will help you discover all you will need to know.

Warning: If you are buying a website, then you can skip this stage of the research process UNLESS the site you are buying is a well known brand in it’s industry.

Better Business Bureau: Search the Better Business Bureau’s database for reliability reports on your competitors. You can search by name, address, and phone. You can even check out businesses of a specified type within a certain mile radius.

ok, there you have two of the best sites to conduct your public relations research.

KnowX: Use KnowX to search lawsuit public records by defendant, plaintiff, case number, date and type of case.

There is nothing worse than buying a website or domain name and then receiving a letter from a global mega-brand that says we are not allowed to use the domain.

We know this because it has happened to us.

Below are a list of tools that you can use to do legal research on trademarks, patents etc…

Trademark Electronic Search System Use the Trademark Electronic Search System (TESS) to perform basic, boolean and advanced searches for trademarks.

SEC Filings and Forms Check out the Securities and Exchange Commission’s database for company filings.

Patent Electronic Business Center Search the patent office’s records for full-text and full-page image returns on your competitors’ issued and published patent applications.

Market research is a fundamental area of research that you should be doing on your competitors. Also, if you are buying a website then you should use the following market research tools to learn the hidden secrets of the websites:

SpyFu – Spyfu is a web scraping tool that will show you what a site spends on Pay Per Click adverts. This will tell you if a site is expensive to maintain.

URLtrends gather SEO data, Pgaerank, links, rank trends and more.

Backlink Checker See who is linking to a specific website.

Market Leap Test the rankings of web pages. Great for testing competitor’s sites.

Would you like to know how to see which host a specific website is using?

This can be useful to see if a website is using blogger, free hosting etc…

Who is Hosting This – This is a superb tool. It will show you who is hosting a specific website.

Website Pulse – Website pulse will show you the speed of a web host. It shows response time, sizes and more.

Would you like to know how much traffic a specific website is getting?

If you are buying websites then it is vital to know how much traffic a site is getting.

Here are some tools that will let you know if they are low traffic or mega sites.

Compete Compete give a great overview of a site’s traffic. It shows visitor info, growth, traffic counts, and you can put multiple sites in a portfolio as well.

Alexa – Alexa is the obvious choice, but whilst it is not the gospel that many webmasters think it is, it still provides a good rough guide to a site’s web traffic details.

SEO analyzer This tool will highlight any weaknesses on a website. Then, you simply fix them and BAM! a nice traffic boost.

Statsaholic This will show stats about a sites rankings, page views and a lot more.