Can you make money by starting or buying a niche website, building it into an income source, and then selling it? In fact, people do. You can turn a profit this way, but you need to remember two things. First, it takes some serious work over a period of months or more. Second, you can lose money if things go wrong. Let's look further into website flipping.
To Build or to Flip
You can either build and sell a new site or “flip” an existing one. Building a site is a bit like building a house; you pick a market and a location, decide what you want to put there, and go to work. Flipping is another real estate analogy. You buy a site that isn't living up to its potential, fix it up so it's a money-maker, and then sell it.
Empire Flippers, a marketplace for buying and selling sites, presents a case study by a person who started up a niche site and sold it. Doug Cunnington says the project took him a bit less than a year and he turned a profit of $10,479. That's not riches, but it's a nice bit of extra income. Let's take a close look at his account and see what we can learn from it.
We need to remember that we're hearing from one of the winners. Empire Flippers aren't likely to publish stories by people whose investments fell on their face. Doug's story is plausible and seems sincere, but people have failed, and a few have had even bigger successes. He acknowledges in the comments that the business is “super risky.”
Doug does a good job of explaining the process step by step. To begin, he chose a niche and then picked some keywords for SEO. He mentions the important concept of keyword competitiveness. High competitiveness means lots of people search for the keyword, but you have heavy competition for search ranking. If the competitiveness is too low, there are hardly any searches on the keyword.
How do you choose your niche? He doesn't really discuss that. Do you need to be an expert in it? Not necessarily, but certainly you need to do research. He was looking for “a product that was appealing to a male, blue-collar demographic.” Those products tend to be easier to get up to speed on than, say, X-ray machines.
The next step was to pick a domain name. If you're flipping a site, it comes with a domain, but you can change it. Doug was starting from scratch, so a good domain is important. He admits he could have made a better choice, implying that he picked one that was too specific to one product line. Points for honesty.
Then we get to the all-important content of the site. This is a prime area for outsourcing, which is what Doug did. He stresses the need to give detailed instructions to his writers.
You need links to your site, of course, for people to find your blog and for search engines to give them a decent rank. He mentions blog commenting and social profiles. Being active in commenting on relevant blogs is fine; he makes it clear that he's talking about “real comments on real blogs that add some value,” not spam comments. Being visible on social networks is a necessity.
However, he mentions that private blog networks, or PBNs, “carry the bulk of the link juice in my process.” This is more dubious. A PBN is a bunch of blogs set up just for the purpose of linking to each other, to boost search ranking. Google seriously dislikes them and penalizes them when they're discovered. It's a sneaky strategy and could easily fail badly. Doug acknowledges that many people have reservations about PBNs.
Blogs with real, relevant material, what he calls “Web 2.0 blogs,” are a different matter. He mentions running several of those. They provide something of value while linking to the promoted site. He outsourced those and says the outsourcing company did a better job than he would have.
He doesn't talk at all about paid advertising to promote his site. Did he consider it and decide it wouldn't be effective? We don't know.
Generating Revenue and Cashing In
To keep things chronological, let's skip ahead to the discussion of the revenue curve. The graph shows that it took a couple of months for the site to take off, then there was a jump to a higher level of sessions that stayed fairly consistent. Something interesting happened in February, though he doesn't say (and may not know) what. His serious work on the site started in early December, so there was a delay of over two months before he started seeing really good results.
The main thing to take away from this is that growth takes time and ongoing effort. Traffic won't take off instantly. Buyers won't be interested in a site until it's shown a good performance record for months. But if revenue is growing exponentially, Doug suggests hanging on to the site till it flattens out. The higher revenue will translate into a better sale price.
Finally, he sold the site. The article describes the process in detail, including exact numbers for expenses and profit. Empire Flippers takes a 15% commission, but he considers that reasonable for the value he got.
What Does It Mean for You?
What can you conclude from this study? It's just one data point, but it gives a lot of useful pointers. It also slides over a few things.
First, the preparation is very important. Do a bad job of picking your niche and domain name, and your project is most likely doomed. Pick good ones, and you stand a reasonable chance.
Second, you have to build links. As he describes it, it seems like an almost mechanical procedure. He doesn't talk about building on existing networks. The most successful sites don't just create mentions for themselves; they get mentioned. People share posts on Facebook, refer to the site in their own posts and websites, and enhance its reputation. How you do this is an exercise in human interaction, and some people are much better at it than others.
Third, you have to generate revenue. A site that doesn't have current income is hard to sell. He credits Amazon as his source of income but doesn't talk about strategy. The ads have to be ones that appeal to the site's audience. Anyone who wants to make money selling sites needs to become educated in monetization.
Fourth, you have to make the sale. Or not. You've built a money-making site; why not keep it? Doug says that he sold the site partly out of curiosity about the process, partly because he got 20 months of revenue at once. But if the site kept growing in popularity, he might have made that much revenue sooner. The decision to keep or sell is largely a matter of temperament. Do you prefer sticking with something and making it better and better, or do you like moving on to new things?
If you've successfully built a money-making site, selling it isn't hard. Brokers such as Flippa and Empire Flippers will find buyers and handle the details for a percentage. You need to keep good records in order to establish what the site's worth.
There are areas the article doesn't cover. He didn't advertise his site or say why he didn't. He didn't mention networking as a way to promote the site. For his aims these approaches might not have been necessary, but might he have had an even bigger success if he had used them? Or would he just have wasted money and effort?
The article doesn't discuss the hosting platform or give more than a brief mention of SEO techniques. Hosting companies vie for offering the best features and SEO optimization. Content management systems offer plugins to improve site visibility. Knowing how to use them is important. Some sites are easily ported to another host, while some lock you in. That can make a difference to a buyer.
Whether you launch a new site or flip an existing one, whether you plan to sell it or keep it for income, you need to cultivate it carefully and allow time for growth. There are many approaches to success, and you should study them all to decide which suits you best.
If you have reasonable site management abilities, patience, a good strategy, and a certain amount of luck, and if you can live with the risks, you can make money at it.