April 16, 2013
We’ve got a problem…
Some of our blog posts and podcast episodes here at Empire Flippers are about how to build out and scale niche sites. This tends to appeal to the Do-It-Yourself crowd that’s looking to get started and are looking for more information on how to do it.
On the other hand, we also write and talk about buying and selling sites and cover topics like how to sell your websites for a premium, discuss marketplaces like Flippa, etc. This content is valuable for more experienced publishers and those with more money than time.
Both of these strategies have their merits, of course, but:
There are some pretty compelling arguments on both sides. We’ve laid out our thoughts throughout the site, but thought we’d hand this post over to two well-known and successful guys online. Both are experts at both building and buying websites and we’re so glad to share their thoughts with you in this debate post!
Here are our guests:
Chris is a well-known online personality, host of the MMOTI podcast, and runs the MakeMoneyOnTheInternet.com blog. He started his online career fumbling through creating and managing a video game forum and ended up creating and selling a niche site for a staggering 6-figures! (Take THAT niche site haters!)
We’ve gotten to know Chris quite well over the past couple of years and found his approach and his success extremely impressive.
Chris will be arguing in favor of Buying Websites.
You can find out more about Chris here.
We’ve mentioned Spencer quite often here as he continues to crush it building niche websites. He created the highly-recommended Long Tail Pro keyword research tool, blogs at NichePursuits.com and is the host of the Niche Pursuits Podcast.
He has a tendency to drop knowledge-bombs almost everywhere he goes and today is no exception.
Spencer will be arguing in favor of Building Websites.
You can find out more about Spencer here.
Warning: I found some chunky gold nuggets in here and I’m sure you will too. Both of these guys are extremely successful with their ventures and we’re so happy they agreed to go at each other for a bit here so that we can all learn something new. When you’re finished, I’d really love to hear from you in the comments! Please feel free to share your ideas, thoughts, and suggestions!
I’ve edited for formatting/grammar, but have left their arguments intact. Now…on to the debate!
Hey I’m Chris Guthrie and I’ve been making money with websites ever since I launched a video game forum way back in 2005. That forum went on to hit over 500,000 page views per month (booyah!) and yet I only ever made $500 per month from Adsense with it (lame). If I didn’t waste all of my time trying to build that community from scratch I could have avoided all of the countless hours I wasted trying to create something that was never going to be profitable.
“There’s gotta be a better way to make money with websites.” – Click Here To Tweet!
I believe there is.
Buying websites is a way to bypass all of the tedious work that website builders have to spend working on a project just to get it profitable. Instead as a buyer you are able to make an offer based on the amount of money the website earns each month.
Using the first website I built as an example if I had sold that website I could have maybe gotten $6,000 if I sold it based on 12x monthly income, but once a buyer investigated the amount of time I was spending on that website they’d be able to clearly see that it wouldn’t be an investment worth making. Yet another problem – some websites can suck up your time but not provide enough of a return.
That’s the beauty of buying a website instead of taking on all of the risk and wasting time building one yourself. From a website buyer’s perspective it doesn’t matter how much effort you put into making your website look perfect, or the hours you spent trying to write the perfect articles, or – in my case – how many arguments I broke up between forum members. The only thing that matters is how much money the website is making. This is the type of lens that a website buyer gets to look through when evaluating a website for purchase.
The biggest problem I see a lot of people making when they start out is by valuing their time at basically nothing. When you try to build a website from scratch it’s a risk that all of the time you spend working could be in vain. Yes that’s right, your website on the “best pink bicycle scooters” may not turn out to be a money maker. Or even worse the “best pink bicycle scooters” website could start making money for a few months and then Google releases a new update and that website stops making money.
When you take the time to build a website yourself the hope is that a website may make money in the long run and sure you might know a lot about how to make an awesome website, but profitability isn’t a guarantee.
Instead… you could just buy a website that is already started.
Let me give you an example…
Back when I first started making decent money online (a few thousand dollars per month) I was doing niche research for 3D related keywords and I stumbled across a website called 3DTVReviews.org. This website had existing content, some link building was already completed, had some existing traffic and even had some keyword rankings in Google (after all that’s how I found the website). So I looked up the domain using WHOIS.net to get the domain owner and then I sent him an email to see if he’d be interested in selling the website because it hadn’t been updated in 6 months. After a few back and forth emails I offered him $500 and he agreed.
After I took ownership of the website I instantly put Amazon affiliate links on the website along with some Adsense ads as well. I also switched over to a different WordPress theme that was better at converting readers into clicking my advertisements and affiliate links. In the 4 months through the holiday shopping period these were my results:
In total I’ve made roughly $8,000 with this website and that was just the first website I bought as a test to see if this strategy could be effective. Since then I’ve had some great website buys as well as some occasional losers that didn’t provide as great of a return. With this website, it doesn’t get as much traffic as it used to as I’ve turned my attention to my bigger websites (I only buy $10,000+ websites now) but a nearly 1,500% ROI in 3 years isn’t so bad. Ultimately if you have money that you can afford to invest (knowing the risk of going to $0 is a real possibility with any investment), then I encourage you to explore buying websites instead of building them from scratch. At the very least you could buy a website in a niche you’re interested in with some existing traffic that you can build on instead of starting at 0 visitors.
I’ll concede that if you don’t have money that you can afford to risk then this certainly isn’t an option for you, but if you money than it’s worth pursuing.
You can absolutely buy a website that goes to $0 so there is a risk with this method. Every website is different though, which is why it’s important to look at the income history, income sources, traffic history, traffic sources, age of the website, quality of the content, potential duplicate content, quality of links and overall ease of managing the website. I explain all of these factors along with a lot of other ways to improve your chances of picking a winner in my latest Kindle book:
($2.99 on Amazon)
Justin and Joe presented Chris and I with the opportunity to debate the topic of whether its a better idea to build a website from scratch or to buy an existing site. This is a great topic and one I’m happy to discuss.
First, I want to give a little bit of my own background and why I might be someone who can speak with authority about the potential in building sites from scratch.
I built my first website in 2005. It was a pretty big failure. I went on and built a few more sites between 2005 and 2008. Again, most of these were not successful. However, during this time I started learning a lot about SEO and how to truly do proper keyword research.
I finally got my first taste of success when in late 2008 and early 2009 I built a couple of small niche sites that started making about $20 a month each. These sites were a HUGE motivating factor for me to expand my business and build more sites. Over the next couple of years I built hundreds of sites and quit my full-time job on March 11th, 2011 because my online income had surpassed my “day job” as a Business Banker with Wells Fargo.
I’ve found HUGE success in building my own sites from scratch, and I recommend people start with building their own sites over buying sites to start in MOST cases for a few good reasons.
1. Low Investment. I am going to make the assumption that most people reading this don’t have stacks of cash hidden in their basement. Building a website from the ground up is actually very inexpensive…especially if you write the content yourself. In fact, even if you hire someone to write content for you, design a custom logo, and buy a premium theme; the investment may still only be a few hundred dollars.
When you compare a few hundred dollars that a website might cost with a few hundred THOUSAND dollars that people spend to start a “real” business like a restaurant, the investment is extremely low.
2. Learn Valuable Business Skills. You learn better when you have to struggle through things yourself. Sure, it takes a little bit longer trying to figure out how to set up hosting and configure WordPress and perhaps even customizing the look of your site. But because I had to struggle through lots of little issues with my early websites, I am now MUCH more effective at managing my sites and can get things done much more quickly.
Let me put it another way, problems are going to arise with any website. If you don’t know how to fix the issue yourself, you will have to hire someone. This will cost both money and time as you wait for someone else to fix it.
And finally as you truly “learn the ropes”, you will be able to do more and more with your sites down the road. Sure, you might have a few more headaches early on, but it will pay off in the long run if you build your own websites.
3. Higher potential Return on Investment. At the end of the day, most of us are hoping to run a successful businesses. So, if I can turn a few hundred dollars into a $1,000 per month income stream…that’s HUGE! One of my sites that I built cost me about $200 to build. However, because I did proper keyword research and starting ranking #1 in Google for a high value keyword, this site was earning me $3,000 per month at its peak. Now this is an abnormally high return on investment…but the potential is there!
If you were to buy a site that was making $3,000 per month, you investment would be $60,000 or more just to start. To get the same ROI percentage that I earned with a $200 investment; the site would have to earn MUCH more than $3,000/mth.
So, while buying a website might be a good way to gain an income stream; its not even close when comparing potential Return on Investment.
Buying a website is not even close (to building sites) when comparing ROI potential! – Click To Tweet!
Now perhaps I shouldn’t help Chris out by listing some of the reasons against building a website from scratch, but I’m going to in order to be fully open. (And to pre-emptively strike down Chris’ potential arguments making them seem less potent…hehe :) ). However, you should also note that while I’ve always been aware of these potential downsides, I’ve always personally opted for building websites as opposed to buying them.
1. Higher risk. Anytime you start a business from scratch its going to be more risky than if you bought an established one. This is counter-balanced by the fact that you also have a higher potential return on your money when starting from scratch.
The reality is that many new websites fail. This could be due to not properly targeting low competition keywords or for any number of reasons.
2. A Bigger Learning Curve. Learning how to find a niche, build a site, produce content, monetize, and more takes a long time to learn properly. This big learning curve is one reason many new sites never really get off the ground. If you buy a site, most of these difficult parts of the learning curve may be eliminated.
However, I will mention again that by learning all the skills yourself will actually help you in the long run.
3. Longer Time Commitment Before Money is Made. If you build a website from scratch, you won’t make money starting on day 1…but if you buy a site with existing revenue, you will. The reason for buying a site is to get that guaranteed revenue. However, the reason for building a site is to recognize that with the higher risks and longer time commitment you can achieve a much higher return.
I personally have built lots of websites from the ground floor up, and as a result I’ve been able to quit my job and pad my bank account with the returns. Because building sites is such a low investment, I think its the ideal option for most of the people reading this. If you are willing to put in the time and effort to learn the skills needed, you not only will build a successful site, but you can also take those skills and use them on future projects.
You won’t learn all these skills if you just buy a site.
Overall, you need to find a strategy that works best for you; whether that’s building a site from scratch or buying a site. However, as I’ve taken all of these factors into consideration for my own business, I’ve found that building sites is the way to go, and is the strategy I recommend most people follow.
Have a different opinion? I’d love to hear you comments of questions below!
I’d like to start by saying that Spencer did a great job at outlining why it’s better to build websites from scratch instead of buying them. Several of his points I agree with because after all, I didn’t buy my first website until after I had already found success in building profitable websites. As I said at the end of my first article:
“When it comes to websites you should only invest money you can afford to lose!” – Click To Tweet!
which may eliminate some of you reading this from using this as a viable strategy to make money.
With that said I’d still like to respond to some of what Spencer had to say in his earlier post.
“Building a website from the ground up is actually very inexpensive…especially if you write the content yourself. In fact, even if you hire someone to write content for you, design a custom logo, and buy a premium theme; the investment may still only be a few hundred dollars.
When you compare a few hundred dollars that a website might cost with a few hundred THOUSAND dollars that people spend to start a “real” business like a restaurant, the investment is extremely low.”
It’s true that building a website from the ground up is very inexpensive and sadly this is the reason why so many people find it easy to give up. When you buy a website it’s like you’re buying a “real” business because it’s already established and earning revenue. Because of the up front cost and existing revenue stream, the ability to give up isn’t really acceptable for a website buyer.
For example, a website I bought for $6,500 back in late 2011 had Adsense disabled 9 days after I bought the website. To make a long story short it was a Terms Of Service violation that I didn’t catch because the previous owner had Adsense on the website for 4 years with no issue. In any case, I got the Adsense re-enabled and in roughly a year I haven’t had to touch the website and my investment is nearly paid in full. Had I spent a few hundred dollars building that website or done the work myself and Google disabled the Adsense it’d be easy to just throw away that work and move onto the next project.
I’d be wasting some money sure, but also my most valuable asset of all – time.
More from Spencer:
“Higher potential Return on Investment. At the end of the day, most of us are hoping to run a successful businesses. So, if I can turn a few hundred dollars into a $1,000 per month income stream…that’s HUGE! One of my sites that I built cost me about $200 to build. However, because I did proper keyword research and starting ranking #1 in Google for a high value keyword, this site was earning me $3,000 per month at its peak. Now this is an abnormally high return on investment…but the potential is there!
If were to buy a site that was making $3,000 per month, you investment would be $60,000 or more just to start. To get the same ROI percentage that I earned with a $200 investment; the site would have to earn MUCH more than $3,000/mth.
So, while buying a website might be a good way to gain an income stream; its not even close when comparing potential Return on Investment.”
I agree that investing roughly $60,000 for a website earning $3,000 per month is a lot, but as Spencer said his example website that got to $3,000 per month was “an abnormally high rate of return on investment.”
When you are buying a website already making $3,000 per month there is a much higher likelihood that website will continue earning money vs the chance that you will be lucky enough to reach that monthly income mark building a website from scratch on your first, second, third, fourth etc tries - Otherwise, I’m sure I’d be a millionaire by now! One of my better or more successful websites was making thousands of dollars per month and I later sold it for six figures, but if it were that easy for me (or anyone) to create these successes I’d probably be off snowboarding, surfing, playing video games and doing a whole lot less work than I am right now.
Ultimately the one factor that should determine whether you should buy a website instead of building one from scratch is whether you have more money than time. When I first got started earning money online, making an extra $200, $300 or $1,000 per month would have been great for me. Now with 6+ years in business and going on 4 years full time an extra $1,000 per month doesn’t really have as much of an impact. This is precisely why I try to find as many ways to make my money work for me rather than spend more of my time working for money.
In every case, the websites that I buy are purchased with the idea that the work can be easily outsourced so that I don’t have to do anything except collect the check. Yes, I know that when you build a website from scratch you can reach this point as well, but when you buy a website you get that instantly. If you’re building a website from scratch you’re going to be trying a bunch of things, some will stick, others won’t and you may or may not make money.
For me it’s all about ROIT – return on time and investment. The reason why I’m now no longer buying websites for under $10,000 is because I need to make ever increasing amounts of money from my investments to warrant the time I spend on new projects or I’ll stop being able to grow my business. By the same reasoning it’s hard for me to justify building a website from scratch unless I devote a massive amount of time behind it so that it can turn into a much larger income stream. Likewise, this is why (of the millionaires I’ve met that are buying websites) most are generally only buying websites for $100,000+ and up.
“I strongly suggest if you’re just getting started without much cash – Start with building websites.” – Click To Tweet!
In the end we all want the same thing – to earn extra money online. For some it’s just an extra $1,000 a month while for others it’s the desire to build an income stream that can replace our day job. For the past several years I’ve loved finding all sorts of new ways to make extra money online and I hope that you ultimately find something profitable and enjoyable to do.
You can also check out my book on buying websites for $2.99 here.
Overall, Chris makes some great points about buying websites. In fact, what I love about this debate is that BOTH are great options! After reading through some of “Big Man” Guthrie’s arguments, I think its important to stress that whether or not to build or buy a site will likely depend on your current financial situation and experience in building sites overall.
If you have money to spend, buying sites may be a good option. But even so, if you have no experience, you are likely to make a poor site buying choice because you may not know exactly what to look for.
Here’s are just a few of Chris’s points that I want to respond to.
“If I didn’t waste all of my time trying to build that community from scratch I could have avoided all of the countless hours I wasted trying to create something that was never going to be profitable.”
Another way to look at the time Chris spent on this “failed” forum community is to understand the valuable education he learned. By building a community and vibrant site he learned how to overcome many of the basic struggles that come with getting hosting set up, designing websites, managing content and a community, along with MANY other little issues that come up when building an online business.
This early experience has likely helped Chris make smarter decisions, the ability to customize and monetize sites more quickly, and much more.
And of course he learned that a forum is probably not a good way to make money :-).
Another quote from Chris:
“Or even worse the “best pink bicycle scooters” website could start making money for a few months and then Google releases a new update and that website stops making money.”
Well, the truth is that Google doesn’t care if you built your site from scratch or bought an existing website. Either site is JUST as vulnerable to a Google update. In fact, the Panda and Penguin updates are perfect examples of large existing websites getting penalized. Here’s just one list of authoritative sites that were negatively impacted by a Panda update.
So, if you decide that generating traffic via Google is part of your business, then it doesn’t matter if you’ve built the site from scratch or purchased it, the risk is shared by both options. So the risk is actually greater if you’ve invested thousands of dollars to buy a site and have that investment disappear overnight from an algorithm update.
For either option, just go in with your eyes wide open; you need to be aware of the risks, and a Google change is a risk for both options.
Chris also said:
“Since then I’ve had some great website buys as well as some occasional losers that didn’t provide as great of a return.”
Overall, I know Chris is profitable with his website buying business; however, even with all of his experience he still buys some that lose money. I point this out simply to again stress that if you don’t have any experience building or buying websites, you are not very well equipped to go out and buy an existing online asset.
You need to gain experience and the knowledge of what metrics to look at before buying a site, and I contend that working through the process of building one on your own is a great way to gain that experience…and can be done for much less money.
And one final quote from Chris:
“I’ll concede that if you don’t have money that you can afford to risk then this certainly isn’t an option for you, but if you money than it’s worth pursuing.”
I agree 100%. If you have money you are willing to risk, you can “learn the ropes” by purchasing a website. I suspect that many people reading this post don’t have the money needed to buy a site; and for that reason, the resources you probably do have (time), will be better spent starting one from scratch.
Overall, I think Chris and I probably agree on at least this point: the option that is best for you really depends on your money and experience that you have.
“I like building sites because the potential ROI is much greater and the initial investment is low.” – Click To Tweet!
But the reality is that both are great options for an online business; just take a look at the pros and cons and make the decision that works best for you.
Justin here – HUGE thanks to both Chris and Spencer for this post! I tend to learn so much when people are debating different viewpoints and I hope this was as valuable for you as it has been for us.
What do you think were the most compelling arguments? What points did we miss? We’d love to hear your thoughts in the comments!
If you dig this post and want to see more like it, please feel free to use the links below to share on Facebook, Twitter, etc. If you’d like more valuable debates and case studies, sign up for our email list!