If you are thinking about selling your dot.com business, the burning question is "How much is it worth?”  According to Charles Bennett, a business broker and the owner of Bizology.com, pricing variables are changing faster than they can be tracked.  "It's a wild west out there when it comes to assessing the market value for your virtual real estate,” says Bennett.  Although Bennett stresses that his ideas on web sales are opinions only, they are issues to consider if purchasing a web business is in your future.  In Bennet's opinion, the following items are key considerations in assessing the worth of a dot com business. 

1. URLs— A year ago the common practice was "shorter the URL the higher the price".  Now the trend is shifting towards key search phrases.

2. Value Verses Worth— If a web site is attracting less than 3 million hits a month, it might not attract the big players that are paying high prices with OPM (Other People's Money).  These players are buying "market share" and not a revenue stream.  Smaller players are interested in buying income or a return on investment (ROI).  If the return on the investment is not there, a buyer might do better to invest the money in stocks or mutual funds that would bring a 20% or higher return.  As a customer, you do not pay for potential, but the potential is a consideration in clinching the deal.

3. Domain Name— When valuing a web-based business, domain name uniqueness is a consideration.  Sites named after a search keyword or phrase generate instant hits without the need for expensive advertising for brand recognition.  However, there is no reliable formula for establishing this value.  That is, there is none that is acceptable to a banker or an appraiser.  Nor can you depreciate a domain name or write it off as a business expense.

4. Traffic— Traffic is measured by unique visitors and page views, not hits.  Page views give an idea of the advertising revenue that could be earned with banners.  A "unique" visitor is defined as someone who has never been to your site before.  It does not apply to someone who cached your site in his or her memory and relogged.  While exercising due diligence, the buyer will identify the numbers that are logged for real.  Some buyers will pay based on the number of unique visitors you obtain in one day or over three months.  Whether your traffic is peaking or declining is another sales consideration.

5. Income— The income and the sources of income that your site generates are considerations.  How much are you making through banner ads, click-throughs, affiliate programs, subscriptions, or sales?  Sites generating income from multiple sources may be more attractive to the buyer.

6. Assets— Determining exactly what your assets are is more complex than it appears.  You will need to know exactly what you are selling.  If you did not write the web site yourself, the person you paid to set up the code might own the copyright on the code and layout.  Who owns the graphics and the GCI scripting?  If you used shareware scripts, you will need releases.  Do you have a trademark?  Does your website have a business license or a trademark?

7. Confidentiality— If you make it public knowledge that your website is for sale, expect to lose some business and traffic.  Subscriptions and sales will drop.  Customers do not know if new owners will honor your warranty, rates, and terms, or if they will provide the same quality of customer service.

One last thought.  If you are selling a privately held dot com company, you might have to finance the sale yourself.  Bankers and other financial institutions are reluctant to finance dot com businesses, given that there is nothing to put up for security.  If you are going to finance the sale personally, you will have to decide whether the site is likely to survive without you.  You will also have to determine the likelihood that your site will generate profit over the next five years or so.

Charles Bennet's last piece of advice: "If you think you may want to sell someday, prepare your business to be sold from Day One.  That's the secret of the sites that have sold." 

June Campbell is a professional writer whose work has appeared in several international print and online publications.  As the owner of her own business, Nightcats Multimedia Productions, she provides business writing services and online sales of business templates and guides from her web site.  Her web site offers a number of resources to small businesses - including guides for proposal writing, business plan development and more.  Website: http://www.nightcats.com/