Should I Buy A Large Online Business Or Several Smaller Sites?
Go big or go home.
We’ve heard it in sports, politics and show business. Considering the various huge –– not to mention successful –– icons in those arenas (think LeBron James, Donald Trump, and Lady Gaga), it might seem like a universal truth.
But is it true in online business?
When building your site portfolio, you have two main options: invest in a few, bigger online businesses — or collect several smaller sites.
Some buyers might take a look at the revenue potential of a large, established site and sign on for a big financial commitment too hastily. Or perhaps they feel comfortable with the perceived low risk of smaller sites and gobble up a slew, without considering all of the accompanying work.
Without taking into account their personal management styles, future interests and levels of commitment, an unwitting Portfolio Paul, DIY Dave, or Strategic Sally might find themselves in a pickle.
How to Choose Which is Right For You
For both fledgling and seasoned online business owners, the answer might not be so clear.
Take a look at some pros and cons of both scenarios, and find the right path for you before making important decisions about your current and future online portfolio.
Pros of Larger Sites
It’s easy to love large sites.
To start, having one site means that your energies are unified and directed towards one main goal: making it successful. While multitasking might be the purported skill of the 21st century, recent psychological studies will tell you that this is not the best path to success.
In fact, it is easier to focus on one task than it is on multiple ones simultaneously. By pouring more time and effort into a single site, you can go “all in” and do everything possible to maximize its potential.
Such focused effort and resources can be crucial when growing and building revenue. Large sites may already have a known brand identity. Perhaps they are considered the go-to for that particular niche and have consistent traffic from multiple sources. In that scenario, the goal then becomes expanding an existing market base rather than building one from scratch.
A prominent brand identity also allows the site to gain traction in the niche and have more domain authority. These types of sites rank better. This is good news for sites whose main traffic source is SEO, and even better news for large sites that can get traffic in other ways. Owners of these sites can rest easier knowing that their success does not solely rely on surviving a Google update.
With large sites, owners can feel that they are steering a large, trusty ship that has weathered several storms and is on course for success.
Cons of Larger Sites
However, as Titanic taught us, even unsinkable ships can hit icebergs.
One such pitfall is the limits large-yet-targeted sites face in their content and sales potential. Niche markets are, by nature, limited in scope. Due to the desire to completely dominate one topic without floating into another, authority sites have a laser focus when it comes to the content and products on their site.
Even behemoth niche sites like ESPN (sports!) must have clarity in their target content in order to maintain their brand identity. Given that aim, expert status can sometimes pigeon-hole the possibilities for sales and growth, because the market and products are somewhat fixed.
Even the highest-ranked cat sweater website doesn’t have much room for expansion. (Although with the rise of Instagram celebrity pets, who knows…)
For these reasons, large sites must overcome another potential hurdle: in-house diversified traffic and monetization.
While groups of smaller sites can easily vary their revenue drivers (see below), large sites tend to rely on fewer monetization strategies. A large content-based site might predominantly count on SEO and Google AdSense to drive its viewership and monetization. Because it is not focused on product sales, it cannot as easily take advantage of other revenue drivers such as dropshipping or e-commerce.
This means that the site must garner traffic from multiple sources, such as email marketing and social media, which will drive its monetization and revenue potential.
That limitation leads to the final potential drawback of focusing on larger sites: the singular consequences of failure.
Notorious explorer Christopher Columbus had this drawback in mind when he launched his fleet of ships: if one sunk, at least the other two might make it.
Site owners might consider a similar strategy when building their portfolios. Placing the success of an entire portfolio onto one site can feel like a big risk. If a large portion of the site’s traffic is driven through organic search, a Google update could cause serious damage. Suddenly, your main revenue source has a fire-alarm emergency.
Even the most confident of site owners might get queasy about such a huge bet.
Pros of Smaller Sites
Those who want to lower the all-eggs-in-a-basket risk of investing in one large site should consider the alternative: many eggs in many baskets.
This means buying several smaller sites.
Buyers who have a grasshopper-like workflow, or who enjoy the pace and challenge of simultaneously managing multiple projects, might feel more at home with this strategy.
One of perks of this option is that it gives owners the ability to test out which sites could possibly grow into celebrity status, or become a larger authority site in its arena.
Managing more than one site gives the owner the flexibility to test different strategies across content areas and see what works. With smart maneuvering and a bit of luck, one of the sites might take off and become the revenue leader of the group. You might even be able to find a diamond in the rough that the previous owner missed.
Speaking of income, owning several sites also naturally diversifies your monetization strategies. Across multiple sites, you can use varying combinations of AdSense, Amazon Affiliates and dropshipping revenue, to name a few models.
Having more than one revenue stream gives site owners security, in the knowledge that they’ll continue to see money coming in month in and month out, especially if something were to go wrong.
Many site owners have undergone the trauma of realizing that a Google update or other technological calamity has severely damaged their site’s traffic. In addition to the mental and emotional agony of losing all that hard work, such a calamity consumes time and energy to get the site back on course.
As mentioned above, multiple site owners can breathe a little easier and take comfort in knowing that even if one of their fleet is taking on water, the others will stay afloat.
Cons of Smaller Sites
That said, managing multiple sites is not for the faint of heart. Even the positives previously described above can have their downsides.
Diversity, one of the most attractive qualities of smaller sites, can actually translate to spreading yourself too thin. For example, you might have a mix of content sites, lead generation sites, e-commerce sites and more across your portfolio. All of these platforms require varied skills and expertise in order to make them successful. That pulls your attention in a lot of different directions.
A strategic buyer might attempt to purchase sites that require similar skill sets in order to cut down on this issue. But even with this strategy, the owner will still be required to split their time across the sites. Jumping from one to another inevitably means that no one site gets devoted attention. Perhaps one of the sites in your arsenal has the potential to become much larger, but without the proper time invested, it will never achieve the status it otherwise could.
Due to their size, smaller sites naturally earn less income than larger ones. Multiple site owners then have less stability in their monthly revenue than their larger-site-owning counterparts.
In addition, the safety and risk minimization that a diverse portfolio seems to offer might not be so reassuring, if all the sites within a portfolio rely on the same methods for garnering traffic. Since most smaller sites rely on SEO, all of the sites in your group could get taken out by an update. Suddenly, you have several ships going under at the same time.
Such an emergency could be a particularly big deal if your site portfolio is a main source of income for you.
What Buyers Need to Know
So, what’s the verdict?
Well, unfortunately for those who like straightforward answers, this one is not so black and white. It can come down to preference and personality.
Potential buyers need to answer several questions for themselves:
- What is my preferred workflow and management style? Laser focused or grasshopper?
- How do I feel about risk? Which option makes me feel more secure?
- Imagine a Google update catastrophe on one large site or multiple small ones. Which situation would you rather tackle?
- What are my skills? Do I have the ability to stretch them across multiple platforms?
- Will this be a primary source of income?
In order to help narrow things down for yourself, consider which of these buyer personas you most identify with.
Big Site Personalities
Buyers like Sally don’t want to invest in just any site –– they want sites with returns they can count on. Big sites are all about dominating a niche, which can be a huge draw for those looking to greatly profit on their online businesses. With big sites pulling in much heftier incomes, they’re an obvious choice for the savvy empire builder.
The set-it-and-forget nature of large sites works well for owners who want minimal effort with profitable returns. Smaller sites may require more day-to-day maintenance, but owners can be more hands-off with large sites, whose brand power and solid revenue stream can carry much of the work.
Small Site Personalities
Flipper Fred / DIY Dave
Freds and Daves love tinkering and playing around with possibilities. They are willing to put in the extra time to really maximize the potential of smaller sites. While they might have different motivations for doing so (Flippers like finding unrealized income, DIYers like doing the work themselves), both will play with various elements of the site to make it as successful as possible.
As evidenced in the name, those wishing to develop their portfolios might not mind adding smaller sites to increase the variety or depth of the businesses they own. This will depend a lot on the site’s nature and level of maintenance, as those needing high levels of client interaction, or constantly updated content, might need a commitment that exceeds the amount of time Paul wants to invest. However, given the right mix of topic and time commitment, this type of personality will likely be up for the challenge.
Big Sites Win, But not Always
So, captain, what floats your boat?
By now, you should have a pretty clear sense of what site options will be the best fit for you. Yet, it is important to know what the industry truths indicate so that you can make the most informed decisions possible.
Ultimately, buying one large site has bigger and better upsides for all the reasons mentioned above: unification of resources, brand power, and high revenues. Committing to one behemoth site can be worth it in the long run, even if the risk at the outset seems higher.
Considering that the ultimate goal for many buyers is creating authority sites with substantial returns, tossing your anchor into a large site can provide focus, stability, and opportunity. With pointed resources and effort, tried and true traffic, solid monetization methods, and brand inertia, large sites mostly require high-level steering into a path for success.
However, the drawbacks for large sites (pigeon-holed market, bigger consequences of failure) still exist. Those unconvinced or unwilling to take on the responsibility of large sites still have the option to diversify their portfolio with several small sites.
This strategy allows buyers to diversify their assets, develop and test multiple projects, and rely on varied sources of revenue. Such buyers will likely sweat through more moments of heavy sailing to bring their boats to shore (think learning different skills, managing Google SEO updates, and navigating unstable revenue), but the potential payoff at the end could be worth it.
Are you ready to start building your portfolio, whether that’s upward or outward? Check out our marketplace for a complete array of sites, large and small, to choose which is best for you.