This article is about helping you create a blog that you can sell to make huge money. In the abbreviated story below, I will tell you how you can make your blog attractive to buyers, how to find the right buyer, how to negotiate a premium price for your blog, and how to structure the sale.
This is the true story of how I co-founded and sold my personal finance media business in 2 years.
How and Why I Founded FiGuide.com
I founded Figuide.com during business school when I was learning everything about finance that I thought every adult should know, but doesn’t. So I set out to conquer the problem of helping consumers get hard to answer financial questions answered. You know the ones, “Is it better to invest in a 401k or a Roth IRA?” or “What is the best way to set-up an estate plan for my family even though we don’t have a million dollars?”
How We Operated our blog and Grew
In order to understand how we were able to sell our business and what made us attractive to our buyer, you have to understand how FiGuide.com operated.
From the start, we recruited a network of financial advisors that grew to over 100 to contribute content and to answer consumer questions on FiGuide. Financial advisors were a trusted and underutilized network that could help bring our vision of helping consumers get those hard to answer questions answered to reality through blog posts, videos, and Q&A.
The other benefit of having financial advisors contribute content to FiGuide was that they were willing to do it for free. Many of them already had blogs with minimal readership. We were a free marketing and content distribution platform for them. It was a win-win.
We never paid a single dollar for any content produced on our website.
Our growth was 100% organic. No paid advertisements and no paid marketing dollars. More than 75% of our traffic was from organic SEO via Google. The remainder came from email, word of mouth, media, and social media. Our monthly expenditures never exceeded more than $200.
In other words, we were lean and profitable.
Knowing it Was Time to Sell our blog:
After 2 years, we were far from being what I would call a large media company nor were we even one of the largest personal finance blogs, but we had created value and we were bringing in decent revenue and profits via our advertising network partner.
Early on, we partnered with an organization that serves as one of the largest network of independent financial advisors. The majority of financial advisors who wrote for FiGuide.com were part of this organization. In exchange for promoting our content to their readership, we helped increase their brand to our readership.
When I graduated business school I had to make a decision. Do I try to grow FiGuide into a full-time business, do I continue to run it part-time and enjoy the monthly ad revenue checks, or do I try to sell it, cash out and move on to other opportunities?
I opted for the latter, more so for personal reasons than any other.
How I Was Able to Sell FiGuide
I had a 7am call with our partner (the one I mentioned earlier) and before our partner could get a word out I asked him the question that had kept me up all night the night before….. “Would your company be interested in buying FiGuide?”
His response was overwhelmingly positive. Before I could blink an eye, he fired off a question of his own; how much are you asking? Whoa…. I wasn’t quite ready for that. I had thought about it before, but I didn’t have an exact price in mind, so I froze for a second before spitting out the number that would end up being the price they acquired us for. No questions asked.
Long story short, we had an Asset Purchase Agreement in draft within a matter of weeks once the company received approval from their Board of Directors to move forward with the acquisition.
I never used a broker, I never put the website up for sale on any website. I never even tried to solicit bids from other potential buyers. This was a private sale with our strategic partner, who had a non-financial stake in the business and this was the company that I knew had the most to gain from FiGuide, and therefore valued FiGuide far greater than anyone else could.
What Did I Learn and What Should You Know About Trying to Sell Your Blog?
1.) Act like a media company, not a blog:
Act like and call yourself a media company, not a blog. A blog is personal. Personal blogs are not acquired, media companies are. You need to implement systems, get external contributors to write articles for you regularly, set-up and track your financial statements, build strategic partnerships, and more.
2.) Find a Partner(s), Before Searching for a Buyer:
When you have strategic partners you have potential buyers. James Altucher , founder of StockPickr.com, tells a great story of why he gave TheStreet.com 50% equity in his company before he even launched it. TheStreet.com went on to acquire the other 50% of StockPickr for $5 Million in just a couple of years.
There are directories and websites that allow you to sell your blog/company online, such as Flippa.com or even Craigslist, but I consider these to be the lemon model. Yes, you can sell a blog/website/company on these directories, but in the end you are selling yourself and your blog short. It is far more advantageous and lucrative to find a strategic partner who extracts a premium value out of working with you to acquire your blog.
3.) The Only 3 Things You Need to Do When Negotiating Price
- ALWAYS be the first person to name the price . If the buyer names the price first and it is lower than what you want, it will be a real struggle to negotiate up from there. Price anchoring is a psychological term that is a very strong force when it comes to negotiating price (same with your salary). If you anchor the price with your price first, then your price serves as the starting point (i.e., the anchor) for negotiation. It is much better to start with a price you are comfortable with then risk the buyer sending you a lowball offer. Remember, buyers want the lowest price, sellers the highest price, so name your price first and aim high, real high and negotiate down from there.
- Name a price that is higher than what you are willing to sell for. Here’s why. Prices can only be negotiated lower. Go back to the “anchoring” explained above. Let’s say you are willing to sell your blog for $500,000 and you name that as your price. You may find the buyer start negotiating the price and remember our rule, prices are only negotiated downward, so you might only sell your blog for $450,000. But if you name your price at say $600,000 and the seller negotiates downward from there, you are more likely to end up with the original price you wanted of $500,000. Do this within reason, but set a “stretch goal” and stretch your starting price above what you are willing to accept.
- Price based on how the buyer values your blog, not how you value it. Let me explain. FiGuide had a certain monetary value based on a discounted cash flow analysis that would yield Value A. But the buyer was getting a lot more from FiGuide than just the value of the discounted cash flow. FiGuide was a premium marketing platform for this organization that allowed them build stronger relationships with financial advisors as well as promote their own brand through our platform in addition to getting advertising revenue. They valued FiGuide at Value A plus the value from the extra marketing and relationships it came with.
In addition, our partner was able to sell advertising directly to advertisers. Our discounted cash flow value was based on a 50/50 revenue split with our advertising partner, but since the buyer could sell their own advertisements directly and eliminate the 50% of revenue that went to our ad partner, they could immediately double the revenues of the website without any growth. So now the buyer values FiGuide at (Value A*2) + value from the extra marketing and relationships.
In other words, our buyer value FiGuide at more than twice what it was worth from a pure financial standpoint using a discounted cash flow analysis.
4.) Have Your “You Know What” Together.
Again, this compliments advice #1, act like a company, not a blog. You need to have your paperwork in order and well documented. A buyer will want to audit your financials, they will want a paper trail of everything! Depending on your buyer, they may get lawyers involved. The lawyer’s only job is to make life difficult for the seller in order to help their buyer. Lawyers made our acquisition process 3 months longer than it needed to be.
5.) Create an Asset Purchase Agreement.
Asset purchase agreements are a lot cleaner and easier on all accounts than trying to sell your business, if you happen to have an LLC or any type of Corporation established.
The buyer actually asked me to create the initial draft of the Asset Purchase Agreement. I found a template online, added in my own language and that’s when the buyer’s lawyers got their hands on it and ripped up the old agreement and added about 5 pages of legal text to it. Anyways – I encourage you to read it, because it gives you details of the types of documents we were required to provide and how the agreement was structured.
6.) Create a Separate Consulting Agreement.
The buyer will likely need you to train them on how to operate your blog/website and will need you to continue to operate the blog/website during the transition and for a few months after the purchase is finalized. Don’t get suckered into incorporating this into the purchase price.
This is an important piece and if you read carefully you will see that I separated the “on-going” maintenance of the website and training from any technical work (i.e. coding, programming, design work). I know how little requests like a logo change can turn into a week’s worth of programming work, so we set-up any an hourly rate for programming work separate from the fixed monthly fee to have me train the buyers and to continue to run/operate/promote the website for 3-months during the transition.
We all go with the traditional route of selling a website via Website flipping websites, but if you are one of those visionary who plan to make huge by just selling your blog, work on a strategy. Have a plan in mind, and create a targeted niche community blog, and pitch it to potential company for buying. Do let me know if you have ever tried this strategy to make money from your blog? If you have any additional questions, feel free to ask me via comments.