Should You Sell Your Website? Would You Rather Have Wealth or Sustained Income?


Why would you sell off a successful business?

Why would someone sell a website that is generating income? This question has come up a lot lately.

At one point I had a website that was producing regular income for me that was fairly steady. Someone offered me a large lump some of money (wealth) in exchange for that income producing asset. I decided at the time to make the trade. I sold the income producing website in exchange for a large chunk of money.

So the question today is: Which would you rather have? Income or wealth?

I guess before we can really answer that we have to break down our definitions a bit. There are going to be some assumptions made here, and of course the devil is always in the details.

One scenario is that you have a website that is producing regular traffic and thus income from that traffic. Maybe you are making, say, $1,000 month in fairly steady income from such a website. In all truth that income will likely fluctuate up and down a bit, and you will never see 12 months in a row where the income is exactly $1,000/month. It will go up and down with changes in your traffic level.

In the very long run, I suspect that most content based websites are also at the mercy of Google algorithm updates. This is especially true if you rely on search engine traffic for your “passive” income. If you do not rely on search engine traffic, then whatever traffic you generate is going to be even less “passive” than search engine traffic.

So there is almost like this trap involved: the more passive you want your Internet income to be, the more it will be at the whims of Google and their finicky search engine updates. You may get extremely lucky and never get dinged at all or take a hit to your traffic, but this would be fairly rare if the majority of your traffic comes from search. In the long run, nearly everyone experiences some fluctuations, even if they do not suffer a penalty.

So let’s define “wealth” and “business income” by their advantages and disadvantages:

Advantages of business income: The main advantage of keeping control of your business is that you can scale it up and make more money and generate a higher monthly income. If you are earning $1,000/month from your website and you want to be earning $2,000/month instead, then you know what you need to do (basically). You need to double the size of your website while maintaining quality and possibly earning yourself a bit more incoming link juice as well. The formula is pretty simple really. Scale it up through hard work and additional effort. The income ceiling on this approach is pretty much limitless. If you want to you can always expand into another website, another niche, etc. There is always a way to scale up your income further, provided you want to put in the work (and thus accept the risks).

Disadvantages of business income: The main disadvantage in my opinion is two fold: One is that you are really working a job, especially if you are attempting to increase income. Two is that you are at the whims of Google and the fluctuations of traffic and also potential penalties down the road. As many content publishers now, all of their success can be instantly swept away for no apparent reason. Just ask the “ask a builder” guy who used to be an AdSense case study. Google trashed his site after highlighting him as being an example of AdSense done right. No one is entirely safe from this sort of thing.

Advantages of wealth: Now the alternative to having business income would be to liquidate the business for a large chunk of money. This is what I am loosely calling “wealth” for the purposes of our discussion.

In this case, the advantage is that you can bank the money or safely invest it in order to get a small return. If you have a large sum of money then that “small return” may actually be large enough to cover your living expenses (provided you practice a bit of frugality!). In such a case you have purchased your financial freedom and your time becomes 100 percent your own. If you achieve this state of being through the sale of a website (like I did) then you can always go on to start another website at some point and chase success through some other avenue.

One advantage of having wealth like this is that your income from it can be more stable than business income. Now if you take your money and put into 100 percent stocks you are going to be in for a wild ride and there are no guarantees of course. One the other hand it is a fairly trivial matter to go invest the money much more safely and conservatively in order to milk out about 4 percent or so on the money. Thus you can live on your passive earnings (or come very close to living on them) without risking any of the principle. If you want to be rich and buy lots of toys and expand your lifestyle then you might be better off pursuing business income and involving more risk. The advantage of wealth and conservative investing like this is that you preserve your wealth, live a frugal lifestyle, and keep your time freedom while also keeping your options open in the future. Freedom and leisure are the true benefits that you gain from wealth. Note that this does not mean you are rich!

Disadvantages of wealth: The main disadvantage of going this route is that you are not free to spend money like you are rich, nor is it easy to scale your income up further. Because you are being safe with your investments that means that you would not risk large amounts of it in order to have a big win on future income streams. If you are not willing to take big risks with your money then there is no chance to scale it up in a massive way. That can only happen if you are willing to invest large amounts of it into things that carry some degree of risk with them. Of course you can minimize such risks if you are willing to invest large amounts of your money AND put in a ton of extra work in order to mitigate the risks. But this is not a passive solution and it is certainly nowhere near the idea of putting your money into an income based portfolio to squeeze out a steady 4 to 5 percent.

Why I sold my website

At one time I believed that I wanted to hit a home run…..I thought that I would take my successful business and parlay that into bigger projects with more earning potential.

I found out that I was wrong.

Instead, what happened is that I saw an escape route. I caught a clear glimpse of it by reading this book and then getting lucky enough to sell my existing business for a large sum of money.

There is a mental cost in the fluctuations of online income. I thought that I was immune to those ups and downs but I learned otherwise. It takes a great deal of faith and discipline to keep going through the downturns without losing your momentum.

This is why someone *might* sell their successful business for a big lump of cash. The reasons are summarized like this:

1) You gain freedom from the business and no longer have to work (possibly, depends on your frugality level and how much money you sell for).
2) You transfer your money into a more stable form of income generation (paper assets, very conservative, shooting for 4 or 5 percent return is all…not gambling with the money).
3) With a modest frugality effort you then free up your time to do whatever you like, including the possibility of building another business nearly risk free (investing your time instead of your capital).

What would you do with a website earning $1,000/month? How much would you sell it for? What if it was earning $2,250/month instead? How much would you sell it for then? What if the website income fluctuated a great deal as well, dropping as much as 50% during some months? It is very difficult to predict how a person would react to a 50% loss of income, especially when they have no control over it…..

3 thoughts on “Should You Sell Your Website? Would You Rather Have Wealth or Sustained Income?

  1. ChrisInHawaii

    I would TOTALLY sell, just like you did, Pat. That was too good an opportunity to pass up! Now, if that $2,000 per month income was practically guaranteed, then that might be another story, but Internet income is anything but guaranteed.

    If I ever get a site up to even $1,000 per month, I’m not sure what I’d do. I could sell it, but a $1k per month site wouldn’t net me anywhere near enough to live off the income. I think I would take that 1k site and try to build it up to 2k or more.

    Multi-millionaires often say that earning the first million is the hardest, and I bet it’s the same way with a website. I’m sure it’s hard – incredibly hard – to get a site from 1k to 2k, but going from 0 to 1k is even harder, no? For that reason, I say that if you’ve managed to build a site up to 1k per month, then stick with it. The hardest part is behind you. A website that earns 1k per month from Adsense/search traffic in a post-Panda world is a rare gem.

    So at 1k I’d keep going. At 2k? I dunno, that’s a trickier question for me. I think if it’s a niche that isn’t going anywhere, something that will always be relevant, then maybe I’d try to hold on and build it up to 3k. But it’s such a gamble, especially with being reliant on Google.

    Since that’s the case, maybe the next thing to ponder is…what now? Making money with ads is all dependent on search traffic, but is that wise to be at the mercy of Google these days? Maybe the focusing on the community aspect and even social media will be more important than ever for IMers going forward?

    Reply
    1. Patrick Meninga Post author

      You make good points, Chris. And I think you pretty much described what caused me to sell at the 2K/month point. It fluctuates, it is up and down, it is a long term risk to try to build it out more.

      Now I am sort of back in the starting gate with this site, and I am not sure if it can ever escape whatever penalty the big G has slapped it with. It has a ton of high quality guest posts now and some day they just might kick in and reward me. Or perhaps not. But I am going to give another bit of a push here over the next year or so and see if I can’t get this site earning $100/month. As you alluded to, that first $100/month is the hardest for sure.

      It is probably harder to get from 0 to $100/month than it is to get from $100/month to a $1,000/month. In fact, by the time you hit $100/month you are probably well on your way to being at a solid $300 to $500 per month if you have been working hard and steady. There is such a delay with this stuff. It gets greater later, and all that.

      Recently I have seen a slight uptick in my traffic here at this site, and I am going to keep pouring a bit of time and effort into things here to see if it takes off a bit more. I would like to see 100 uniques per day and also $100/month before too long. If I cannot hit that goal within another, say, year or so I guess I should consider the site dead.

      But shoot, it has 22 solid guest posts and over 500 articles. Tons of free eBooks. You would think the big G would give it some love eventually. We shall see.

      Reply
      1. ChrisInHawaii

        Pat, DO NOT kill this site, even after a year.

        You’re in a flooded niche with new MMO sites coming and going.

        Sure you’re competing against tons of other sites, but how many of them will be renewing their domains a year from now? How many of them will still be online 3 years from now?

        How many of those guys have actual solid content on them? And how many of THOSE guys can point at actual real-life success with their methods, as opposed to just words and ideas that they picked up from someone else?

        Unlike 90% of your competition, you are the real deal, and your site offers real, valuable content. Give Panda and Penguin enough time to weed out the guys that aren’t committed (it’ll take time), but if you can hold on and keep builiding out this site, you could be in a great position in 3-5 years, maybe right back on the front page with tons of traffic.

        Think of it this way…3 years from now, who is Google going to trust in this niche? All the tons of brand new sites that keep coming and going? Or those handful of MMO guys who rode out the algo updates and kept adding more content and getting more guest posts, etc?

        Personally, I think you need to just go back and take your own advice (but be careful about the backlinking advice post-Panda), and give it time to take effect…

        - 3 articles per day (per DAY!)
        - 1 guest post per month
        - plan out your next free ebook (perhaps one that discusses how to go forward post-Panda?)
        - post the ebook material as you go
        - completely redo your sidebar…new ebooks, new graphics, new highlight articles

        If you could regain even a fraction of that fire – that hunger – that drove you to success the first time around, then you can do this.

        Who has a stronger work ethic than Pat Meninga?

        Who is gonna outwork Pat Meninga?

        Who knows the power of massive action better than Pat Meninga?

        Nobody, that’s who…but only if Pat wants it bad enough…

        Reply

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