How to value your online business in 2023

How do you put a monetary value on O’s and 1’s?

In an era where digital real estate commands as much significance as brick and mortar, understanding the true value of your online business or website has never been more crucial.

As we delve into 2023, a year marked by rapid technological advancements and shifting consumer behaviors, the intricacies of online business valuation have evolved.

This guide aims to shed light on the latest methodologies, emphasizing the importance of due diligence and providing readers with actionable insights to accurately gauge the worth of their digital assets.

Whether you’re an entrepreneur, a seasoned investor, or just venturing into the digital realm, this guide offers the knowledge you need to navigate the valuation landscape confidently.

The due diligence top 10

When purchasing or selling a website, due diligence is crucial to ensure you’re making a sound investment. Here are the top 10 things to consider:

  • Traffic Analysis: Examine the sources of traffic. Ensure that the traffic is organic and sustainable. Check for dependencies on paid traffic and the potential risks associated.

Have a look at our deeper dive into traffic analysis here

  • Revenue Verification: Confirm the claimed revenue. Check the consistency of earnings, sources of revenue (e.g., ads, affiliate links, product sales), and any potential seasonality.

Our in-depth discussion on how to verify various revenue streams

  • Expense Verification: Ensure all expenses are disclosed. This includes hosting, content creation, marketing, and any other operational costs.

Make sure you account for all the money leaving the business

  • Content Authenticity: Ensure the content is original and not plagiarized. This can impact SEO and the website’s reputation.

Content, content, content - make sure yours is original and authentic

  • Legal & Compliance: Make sure there are no potential legal issues. This includes copyright or trademark infringements, GDPR compliance, and other relevant laws.

Legal and Compliance Issues - Make sure there are no complex issues or liabilities in your acquisition

  • SEO Health: Assess the website’s search engine optimization. Check for any black-hat techniques that have been used, which could lead to penalties.

SEO Health: Assessing the Website’s Search Engine Optimization - Good and Bad Traffic

  • Technical Audit: Review the website’s infrastructure. This includes hosting reliability, site speed, mobile responsiveness, and potential security vulnerabilities.

Technical Audit: Ensure your acquisition can do what it says it does on the tin.

  • Monetization Potential: Evaluate the potential for growth in revenue. Determine if there are untapped revenue streams or areas for improvement.

Monetization Potential: Evaluate the potential for growth in revenue. Has the market plateaued

  • Customer/Subscriber Base: If applicable, review the quality and engagement of the user base. This could be email subscribers, registered users, etc. Look for patterns in user behavior and churn rates.

Customer Base: Take a deep dive into current customers to spot positive, negative and odd patterns

  • Competitive Landscape: Understand the niche or market in which the website operates. Identify key competitors, market trends, and potential threats or opportunities.

Competitive Landscape: Who is competing with your new business, can you win customers from them? - is the business obsolete?

This series of articles

In this set of articles we’ll be examining each point in more detail to help you get to grips with each subject.