Read this Before You Offer an Existing Website for Sale

A buyer is usually looking for a website whose cash flow can cover its current operating expenses plus three other numbers: 1) the salary that the new owner hopes to earn, 2) projected annual financing costs to cover the amount he or she must borrow to purchase the website, and 3) an annual investment return on whatever cash the new owner puts into the website.

That formula sets a high standard for any website’s cash flow. After all, the current website owner may be drawing a below-market salary or may not need to pay any financing costs if he started the company from scratch. The notion of investment return has probably never even been considered by the website owner, at least not until it comes time to price the website for sale.

If the website’s cash flow can't meet the standard described above, its selling price will have to drop until it reaches a point at which lower projected financing costs help close the deal. And in some cases--especially for those websites in obscure niches without any consolidation activity to help spark a bidding war--the numbers won't ever pan out to support a sale.