When it comes to starting a business, many entrepreneurs aren’t going to have the luxury of a massive bankroll, or be able to live the life of Richard Branson or Mark Cuban.
That doesn’t mean, though, that it’s impossible to build a business and sell it for that coveted 7-figure price tag. In fact, it could be easier than most entrepreneurs think.
As little as 15 years ago, many entrepreneurs couldn’t even fathom being able to build a business and have someone offer them $1 million to buy it.
However, as the internet evolves and more entrepreneurs tap into the global power of it, that 7-figure price tag becomes more attainable.
Here are nine traits that million-dollar websites share.
#1 – Positive Cash Flow
Even though this factor may seem obvious to people, the more profits your business generates, the more an investor is going to be willing to pay for it.
If you’re trying to sell for a million or more, your business will need to generate at least $300,000 per year in profits. There are exceptions to this rule, and the business model you’ve used and how the business is structured play a major role in that.
#2 – Reliable Track Record
You are going to have a tough time finding a business that sold for more than 7-figures that is less than 2-3 years old. Overnight success stories may seem common, but they’re actually fairly rare, and investors will be leery about buying a young business.
Even with the stories that you do hear about overnight successes, most of those stories fail to address how much work went into the business before it hit the point of reaching critical mass.
If you’re looking to sell high, you’ll need to be able to show an investor that your business has years of consistent growth behind it.
#3 – Trending Growth
Anytime an investor is looking into your business, the two principal metrics they’re going to look at are:
- Your traffic stats
- your revenue
You need to be able to display that the business has consistently grown since the beginning and be able to explain away any periods of time where the business may have experienced a downward trend.
If you’re able to explain what happened during the downward trends and focus your investor’s attention on what happened during the growth trends, you’ll be able to ask for a significantly higher price tag.
#4 – Easy to Transfer
When it comes down to it, every business can be sold. However, what many business owners fail to realize is that their business may not necessarily be easy to transfer to a new owner.
Being able to transfer the business refers to how easy it is to move your accounts over to your new investor. This means transferring any agreements you have to them, and making sure there are systems in place that your investor can jump into, and keep the business running once you leave.
For the most part, the less work that’s required by your investor once they take over the business, the easier it is going to be for you to ask for a higher price.
It doesn’t matter how profitable the website is, how big it is, or how popular it is in the community, if an investor has to devote 60 hours every week, they are not going to want to buy it.
#5 – Existing Opportunities
Just because your website may be worth 7-figures, you still need to make sure the market hasn’t been completely tapped out if you want to sell it for that price.
An investor is going to want to see that there is still potential for growth left in it. If they can’t spot growth opportunities, and you can’t present any, getting them to buy it will be difficult.
Investors aren’t offering to buy your business because it’s turning a profit right now. They want to purchase it so they can scale what you’ve already done and generate an ROI sooner, not later.
#6 – Unique Model
Buyers are going to look for a unique business model. It doesn’t take a whole lot to build an online business, but building one that’s unique enough to hold its own in a competitive marketplace takes something special.
If another entrepreneur is able to come behind you and replicate your success, they have the potential of stealing your market share or entirely running you out of business. Your investors will pick up on this fact.
#7 – Limited Involvement
This goes back to ensuring your business can be transferred, and areas that investors are going to look into when they think about buying the business from you.
Hardly any investors will want to sink $1 million into your business just to create a job for themselves. They are going to buy the business because it needs limited involvement and you’ve already taken it through the building stages.
The more systems and documentation you have in place, and the more comfortable the business is to operate without the owner being directly involved, the easier it is going to be for you to justify a higher price tag.
8 – Multiple Income Streams
Investors also want to see that the business is utilizing multiple different traffic sources and that the revenues are diversified as much as possible.
If you’re guilty of putting all of your eggs into a single basket, like relying entirely on SEO for instance, your business is going to be seen as too risky.
Major search engines can change their ranking algorithms, and you can lose your traffic overnight.
You need to diversify your traffic sources, and make sure you’re not relying too heavily on a single source of revenue, too.
Hitting the 7-figure mark if you’re too reliant on one source of traffic or one revenue stream will be difficult to do.
#9 – Accurate Financials
One of the most critical traits to look at when you want to achieve a 7-figure sale is making sure your financials are accurate, detailed, and easy to understand.
If your financials are inaccurate, hard to understand, or sloppy, investors will believe that you’re trying to cover something up or assume that you’ve built the business the same way you’ve maintained your financials.
Before you ever put the business up for sale, you need to spend time going over your books. Make sure they’re 100% accurate, highly detailed, and easy to understand.
Not only will it make the business more attractive to investors, but it will help the negotiation process move forward as smoothly as possible.
When it’s all said and done, each business is different from the next, and what one investor finds attractive may be completely different than what another is looking for!
If you are trying to sell a business you’ve built for more than $1,000,000, you’re going to need to address each of the areas that I’ve broken down for you here.