Flippa Guide - How to buy an undervalued website on Flippa

Summary

This video script offers a detailed guide on purchasing profitable online businesses through the platform Flippa. It covers essential steps, including evaluating business legitimacy, assessing SEO ranking, traffic, competition, and financials. The speaker shares personal strategies for identifying potential passive income sources and ensuring the business is not a scam, providing a bonus checklist for due diligence and emphasizing the importance of verifying financial data with the seller.

Takeaways

• 🛍️ Buying online businesses can be done affordably, sometimes for as low as $50, and offers an opportunity for passive income or financial freedom.
• 📈 The website Flippa is highlighted as a platform where one can browse and evaluate different types of online businesses for purchase.
• 🔍 Due diligence is crucial when purchasing a business online, which includes understanding the business type, website appearance, target demographic, and legitimacy.
• 💰 Key financial aspects to consider are the company's SEO ranking, traffic, marketing, competition, workloads, and overall financial health.
• 🚫 The video mentions avoiding businesses that appear to be scams and provides a bonus tip on how to ensure the legitimacy of a company being purchased.
• 🔑 The importance of checking the monetization method of the business, whether it's through ads, affiliate sales, or a mix of both, is emphasized.
• 🌐 Analyzing the website's traffic and user engagement through tools like Google Analytics and SimilarWeb can provide insights into the business's performance.
• 💬 Communicating with the seller to ask for more information, such as revenue breakdown and access to analytics, is recommended to verify the business's financials.
• 📊 The script discusses the significance of the business's revenue multiple and how it can indicate the potential return on investment.
• 🏆 The potential for a quick return on investment is highlighted, with examples given where the purchase price could be recouped within a year or less.
• ✅ The necessity of verifying the provided numbers and having a meeting with the seller to review the business's operations is stressed for a successful purchase.

Q & A

What is the purpose of the video script?

The purpose of the video script is to guide viewers on how to buy profitable online businesses, particularly through the website Flippa, and to provide tips on evaluating each deal to ensure a good investment.

What is the minimum price mentioned for starting to look for an online business on Flippa?

The script mentions starting to look for online businesses listed on Flippa for as little as $50.

What are the key factors to consider when evaluating a business listing on Flippa according to the script?

The key factors include understanding the type of business, assessing the legitimacy of the listing, checking SEO ranking, website traffic, marketing competition, workload, and the financials of the company.

What is the role of the website 'stethoscope.ninja' as described in the script?

The 'stethoscope.ninja' is an affiliate sales company in the health and beauty industry, making money through Amazon affiliate commissions.

What does the term 'revenue multiple' refer to in the context of buying a business on Flippa?

The 'revenue multiple' refers to the ratio of the listing price of the website to its average monthly income or net profit, indicating how many months of profit the buyer would get based on the purchase price.

Why is it important to verify the numbers provided by the seller of an online business?

Verifying the numbers is crucial to ensure the legitimacy of the business and to confirm that the financial information provided by the seller is accurate and reliable.

What is the strategy for contacting the seller of a listed business on Flippa as suggested in the script?

The strategy involves messaging the seller to ask for more detailed financial information, requesting access to tools like Google Analytics, and potentially setting up a meeting via Zoom to discuss the business further.

What is the significance of the website's traffic source as mentioned in the script?

The significance of the website's traffic source is that organic search traffic indicates good SEO, which is beneficial for the website's visibility and potential for passive income.

What is the potential downside of a website with a downward trajectory in page views as indicated in the script?

A downward trajectory in page views suggests that the website's performance is declining, which could negatively impact its revenue and value.

How does the script suggest assessing the competition for a listed business?

The script suggests checking the competition by looking at similar businesses and analyzing their strategies, which can provide insights into how to add value to the business being considered for purchase.

What is the recommended approach for bidding on a business listed on Flippa as described in the script?

The recommended approach is to determine the maximum amount one is willing to pay based on the analysis of the business's value, and then bid an amount that is higher than the current highest bid but less than the determined maximum.

Outlines

00:00

🛒 Buying Online Businesses on Flippa

The speaker introduces the concept of purchasing profitable online businesses for as low as $50 on a platform called Flippa. They offer to guide viewers on evaluating business deals to ensure smart investments. The goal is to generate extra income, work independently, or achieve financial freedom through owning an online business. The video promises to cover the essentials of what to look for in a business listing, including type of business, website appearance, target demographic, SEO ranking, traffic, marketing, competition, and financials. A bonus tip on avoiding scams is also teased for the end of the video.

05:01

🔍 Evaluating and Analyzing Online Businesses

The speaker dives into the process of evaluating online businesses on Flippa, focusing on filtering criteria such as revenue generation, website and app types, industries, and specific metrics like monthly users, page views, downloads, profit, and price range. They demonstrate how to perform a search on Flippa and provide an example of analyzing a health and beauty affiliate sales company. Key points include assessing the legitimacy of the listing, the business model, website design, target audience, and monetization methods. Financials are scrutinized, including profit fluctuations, expenses, and the potential for passive income. The importance of checking Google Analytics for legitimacy and understanding traffic sources is emphasized.

10:01

🤔 In-Depth Analysis and Seller Communication

Continuing the analysis, the speaker examines the financials of a potential business purchase, including revenue sources and the importance of understanding the mix between affiliate sales and ad revenue. They suggest creating a list of questions for the seller, such as the breakdown of income and access to Google Analytics. The video script includes an example of messaging a seller to request more information and a meeting. The speaker also discusses the importance of the seller's feedback and the reason for selling, hinting at the need for due diligence on the seller's history and motivations.

15:03

🏡 Exploring High-Quality Online Businesses

The speaker shifts focus to searching for higher-quality online businesses with a minimum monthly profit of $3,000. They find a blog about tiny houses and analyze its performance, traffic, and revenue model. The blog's SEO optimization, content strategy, and use of affiliate links are discussed, along with the potential for passive income. The video script outlines the financial attractiveness of the blog, its low costs, and the possibility of recouping the investment within a year. The importance of verifying the business's numbers and having a rapport with the seller is highlighted, along with a strategy for bidding on the business.

📋 Bonus Checklist for Business Evaluation

In the concluding part of the script, the speaker provides a bonus checklist for evaluating a company's financials when considering an online business purchase. The checklist includes the listing price, average monthly income and expenses, net profit over the last 12 months, additional income sources, and the multiple of net profit that the business is listed for. The speaker emphasizes the importance of verifying the numbers provided by sellers through meetings and analyzing the seller's background and the competition. The goal is to determine the company's worth and decide on a bidding strategy that considers the potential for passive income and the required weekly workload.

Keywords

💡Online Business

An online business refers to a commercial venture that operates primarily on the internet, allowing for the buying and selling of goods or services through digital platforms. In the video's context, the theme revolves around purchasing already established online businesses to generate income, with the website Flippa being highlighted as a marketplace for such transactions.

💡Profitable

Profitable denotes a business or venture that earns more revenue than its expenses, resulting in a net income. The video emphasizes the importance of seeking profitable businesses, as the speaker aims to demonstrate how to identify and evaluate businesses that are not only profitable but also potentially offer a good return on investment.

💡Flippa

Flippa is an online marketplace specifically designed for buying and selling websites, apps, and online businesses. The platform is central to the video's narrative, as it is the primary tool the speaker uses to search for, evaluate, and potentially purchase online businesses.

💡Due Diligence

Due diligence refers to the research and analysis performed to assess the viability, legitimacy, and potential risks associated with an investment. In the video, the speaker discusses conducting due diligence on companies listed on Flippa, including evaluating their business models, financials, and SEO rankings.

💡SEO Ranking

SEO (Search Engine Optimization) Ranking pertains to the position a website holds in search engine results, which is influenced by various factors including content quality and relevance. The video mentions checking SEO ranking as part of the due diligence process to determine the legitimacy and potential of an online business.

💡Affiliate Sales

Affiliate sales involve earning a commission by promoting and selling other companies' products or services. The video script describes a business model where a company earns revenue through affiliate sales, specifically by using Amazon affiliate links to generate income when users purchase products through their site.

💡Passive Income

Passive income is income earned with little to no effort after the initial setup, such as earnings from investments or automated online businesses. The video's speaker is interested in businesses that can generate passive income, allowing for financial freedom with minimal ongoing work.

💡Revenue Multiple

A revenue multiple is a valuation metric used to determine the worth of a business based on its revenue. In the context of the video, the speaker considers the revenue multiple when assessing the price of an online business and whether it is a worthwhile investment.

💡Google Analytics

Google Analytics is a web analytics service that provides statistics and basic analytical tools for search engine optimization (SEO) and marketing purposes. The video mentions using Google Analytics to verify the legitimacy of a business and to understand its traffic and user engagement.

💡Selling Reason

Selling reason refers to the motivation behind why a seller is looking to sell their business. In the video, the speaker emphasizes the importance of understanding the seller's reason for selling as part of the evaluation process to ensure the business purchase aligns with one's investment goals.

Highlights

The speaker discusses buying profitable online businesses for as little as $50 and shares a website that lists various businesses for sale.

Provides a method to evaluate deals to ensure the purchase of the right company for personal financial goals.

Introduces 'Flippa' as a platform for buying already set-up online businesses.

Outlines steps to avoid scams when buying an online business, including checking the legitimacy of the listing.

Details the importance of understanding the type of business, its website, and target demographic.

Advises on checking SEO ranking, website traffic, marketing, competition, and financials of the company.

Mentions a bonus tip on ensuring the company being purchased is not a scam.

Demonstrates how to use Flippa to search for businesses, including filtering by revenue, type, and industry.

Analyzes a specific business listing, 'stethoscope.ninja', discussing its potential and business model.

Suggests improvements for the 'stethoscope.ninja' website, such as updating the template for better SEO.

Discusses the financial aspects of the 'stethoscope.ninja' business, noting its low expenses and potential for passive income.

Recommends using Google Analytics and SimilarWeb for verifying a business's traffic and legitimacy.

Advocates for direct communication with sellers to ask for more information and verify revenue sources.

Stresses the importance of understanding why a seller is looking to sell their business.

Shares a second example of a business, a blog about tiny houses, and its potential for high profit.

Analyzes the blog's traffic and SEO performance, noting the high engagement and organic search traffic.

Provides a bonus checklist for evaluating a company's financials before making a purchase.

Encourages meeting with sellers and verifying the business's numbers through tools like Google Analytics and PayPal.

Concludes with advice on making an informed decision on whether to invest in a business based on potential passive income and low workload.

Transcripts

hey what's up i've been buying

profitable businesses online for as

little as 50 and you can do the same i

will show you a website that lists

different types of businesses and i will

show you how to evaluate each deal to

make sure that you're buying the right

company for you you want to make some

extra income or work on your own terms

or run a business that provides you some

financial freedom you can buy an already

set up online business on a website

called flippa in this video i will show

you what to look out for when buying a

business and then i will walk you

through each step of how i search for

business and how i make the decision if

it's worth the investment let's get

right to it buying your first online

business can be scary yes but to lower

your chances of getting scammed i will

also show you how you can find a

business that you can buy to make

passive income there are multiple ways

that you need to check when buying a

business first you want to understand

what kind of business it is for example

uh what type of store is it how does the

website look like what is the targeted

demographic etc from that you need to

make an estimation of how legitimate

this listing looks check the seo ranking

traffic of the website marketing

competition workloads and lastly

what are the financials of the company

stick around until the end for a bonus

tip of how i make sure that the company

i'm buying is actually not a scam if

you're interested in each of the above

mentioned things that i do when i do my

diligence on each company let me know in

the comments and i will make a separate

video on that too but until then let's

dive right in all right so we want to

open flippa

to look for a company i usually just

click browse and select website all

websites

now you can enter some key terms right

here so i want to filter it by revenue

generating yes definitely yes

website and online businesses but i'm

also interested in amazon stores and

ios apps

the others not so much no

website types i'm open for all websites

so i'm going to leave that blank

industries all industries are good with

me for now and here you here's something

that you need to watch out for you can

type in your monthly users if you're

looking for a website you can type in

monthly page views if you're looking for

again for a website

uh monthly downloads if you're looking

for apps and monthly profit and the

price range so usually i just look for

these two so i definitely want to look

for a profitable company so let's do at

least five dollars per month and then

price range let's start with something

uh 300

look for something cheap i click and

enter

the age uh the multiple this is

something we'll get into in a bit

and uh time left this is for auctions

let's look for sales type auction and

classified so now we did the search and

we already have a company showing right

here uh

superability.it it looks like this

company is about travel but it's in

italy and i don't know too much about

the italian market so i'm gonna skip

that i usually don't look at the

sponsored ads

here we have a stethoscope.ninja this is

in the industry of health and beauty and

it's an affiliate sales company

so they have a net profit of 140 dollars

and they only cost 230 so let's check it

out that looks interesting

all right so it looks like their revenue

fluctuates their page views fluctuates

let's look it out it says no reserve

underperforming 2016 amazon affiliate

sales site so pretty much from this

first view i can see that this company

is likely to

put up links on their websites and then

redirects people to amazon and then gets

the 10

affiliate link from from amazon

um so why is this interesting so june it

looks like they're really tampering off

with their profit so maybe they think

it's not profitable anymore the way they

do it

uh what does a business do they list uh

links kind of just what i just said

this is a wordpress website so it's

probably gonna be easy to

manage because wordsight is fairly

simple

uh with a target audience at med

students and health related

professionals so this is also something

good it's in a niche

that uh probably not too many people

cover already so the competition

so it's easy to check out their

competition and see what they're doing

so the company makes money through

amazon affiliate commissions and the

amazon affiliate relationships

ultrascope

um

what are we selling

all right so this looks already like an

interesting business from the business

model and it looks like a legit website

so next thing i do is i open their

website and see what it looks like

all right we have a general logo

it looks very generic it's not loading

right now it says it's not secure so

that could be improved to

increase the seo so that's a good thing

um they have a bunch of articles here

and it looks very generic this is a good

thing for us because we want to buy this

website right so

we always want to think about how can we

add value to this and in this case i

would completely reuse their content

with a new template or maybe

just change the way the website looks

because right now if i was a med student

i would not want to click on any of

these

but it looks like they have content

right like see here

you can read more on each of these

articles so you can rank on seo or on

google if anyone looks for

what's a personalized stethoscope

and then it links me to this

so if i was a med student i read this

and think okay this is interesting and

now i read the list of the reviews and

then i'm let's say i'm interested in it

i would click on it

and once i click on it i get to to the

website and it looks like i probably get

an affiliate link from this

so this is actually really interesting

uh let's look into next thing i want to

look at is into their financials

so monetization method is ads and

affiliate sales so what i would do next

as i create a list of things that i want

to ask the seller and in this case i

would want to ask the seller like what

is the breakdown of money that you make

is it all from affiliate sales is it all

from ads is it a mixture and if if it's

a mixture is it 50 50 or how does it

look like so here we see that the um

here it looks like the the revenue is

fluctuating so that depends on how they

rank on google probably and how many

people go on their website and use the

affiliate links looks like they barely

have any expenses which is a very good

thing so that means that you can run

this business and make passive income

um

last year's annual profit was a thousand

seven hundred dollars and if we look at

the current bid price or auction price

it's 230 dollars so you would make your

money back in less than a month or two

months

so keep in mind this is also an auction

so this is not the final price but you

could purchase this website for 1799

right now so

uh that's actually a good thing because

if you look at their profit

the yearly profit is 1 700

so you could make your money back in

just a year

next thing you check out google

analytics this symbol here means that

it's linked to the google analytics

which means it's legit

and

you see the number of page views 4 000

page views is actually really good for a

website that only cost

230 dollars

or let's say a thousand seven hundred

dollars if we were to buy it now but uh

keep in mind that this is an auction you

can always bid a certain amount and

potentially get it for much less than

it's listed at

so uh looking here uh coming back

down to the numbers that looks good

pages per sessions is fairly low so you

usually want that to be higher but

that's something you can improve with

website design so if you can just change

the theme of the website you can make

this into a nice looking website and

have an increase the page duration and

the average session duration

it also looks like most of the users

come from organic search which is a

really good thing because you do want

most of the people to just find this by

looking at for an article on

stethoscopes

[Music]

and then most of the users are also

united stage which is which is good for

me because i live in the states and this

is a market that i know

um you can ask for more access by just

messaging them and this this is

something that flippa provides you

in-depth traffic analysis you can buy

the full report but i usually never do

that

so another thing i do is sometimes i

look for

[Music]

similarweb.com

and i look for exactly the company that

we just looked at so i look for

that's not the one

so i want to see if that matches up with

a third party and if they have about the

same amount of traffic so i just type in

the the

the website

and i see that the total visits is about

15 000 bounce rate is fifty percent

uh this might be different than what

they list but that's something to look

into and then pages per visit is also

pretty high so that's actually a good

thing it looks like they're downward

trajectory because their rank side is

going up which is a bad sign

but again this is something that you can

change with your website design all

right let's go back to this so next

thing i would do is

ask a few more questions so

now i identify this is a very

interesting website i'm going to put it

on my watch list i click on watch and i

would probably contact the seller

so now i would say hey this is very

interesting could you share some more

information about the revenues how much

money do you make from affiliates versus

google ads could you share the google

analytics with me please

and how can i verify the revenues would

you be open to

meeting with me on zoom thank you

looking forward to meeting with you best

regards mo

then i will send this out

and wait for a response

looking at the seller it looks like they

have only 50 positive feedback so that

could be one good transaction one bad

transaction but he has already four

transactions totaling uh seventeen

thousand dollars so the question here is

um

does he do this to flip the websites and

make money from the website building the

websites and then flipping them or is it

just because he wants to sell it and

that's actually something that i haven't

gone over

in the previous post but i would always

look for

why he's selling

um

so i usually just do command selling

so why is he selling the website he said

i purchased a few websites over the last

two years to learn and experiment with

growing websites at the time of purchase

in june the site was

producing 250 per month shortly after

google ads

so it looks like the website hasn't been

going too well but that is again a good

thing because it looks like it's been

declining

but if you can add value to the website

you can

change the

search engine optimization or you can

change the design you can put some ads

out there and through that get more

traffic to the website and add value and

by adding value you can increase the

sales either back to 250 dollars per

month or above that

uh so that's actually a good reason it

sounds like he's a legit seller but uh i

would always confirm by having a meeting

with a seller having him walk you

through the business and then deciding

whether or not you want to buy the

business but overall this looks like a

good business

um the only cost that they have is the

hosting

which is only 13 a month so overall if

you decide that that you buy the website

for a couple hundred dollars

you spend 13 per month but it's not

working out after a few months you can

just either sell the website again or

you can just shut it down and all the

costume that you had is 200 300 400

depending on what you pay for it

on top of 13 per month hosting fee

um

yeah overall i think this this would be

an interesting website to analyze more

obviously i would do a more in-depth

analysis on the competitors and

everything but for this example i think

this would be uh good enough all right

let's take another look at how i did my

search and how i found this company all

right so i'm on flippa i click on browse

click on websites let's do all websites

and i want a revenue generating business

but this time

also amazon stores ios apps

and i want to look for

and i want to look for a higher quality

company so this time i'm going to look

for three thousand dollars

monthly profit at least let's say 20.

let's just keep it low for now and i'm

gonna keep the revenue multiple and

everything open and i'm gonna

click search

all right so here we have a red box drop

arts motion they do ads

in ireland not too interested in that

they have a good multiple here but i

haven't bought any companies outside of

the united states i want to stay away

from that for now this company looks

really good they have uh

it's only the the only bid right now is

one thousand five hundred dollars and um

their net profit is four thousand

dollars so that looks really interesting

to me uh also affiliate sale so same as

the previous company here we can see

that it is in line the multiple is in

line with other companies that have sold

there have been some cheaper ones but

that could always be an outlier

um so what they do

here is it's a two-year-old blog um

about tiny houses

what they do let's take a look at their

website

uh all right so this looks like it's a

block it tells you a little bit about

the

block writer

and then it tells you a little bit about

gadgets that you can use for tiny homes

and then i assume that once you click on

them

you get links to products that they use

for their tiny homes here here's an

example

and then when you click on it it has an

affiliate link here we can see

referral codes uh

here's a link referral code which means

that the seller gets at least 10 of the

revenues when you buy this product

through this link

um but going back

overall this looks very interesting it's

very block style so people trust it but

let's see how the revenue and the

traffic looks like

um

we have a performance overview right

here so

they've been getting more and more money

uh throughout 2022 so they've been

getting more and more traffic views

which means that the search engine

optimization is pretty good they have

over 115

seo articles published which is good

and

overall this looks also like a very good

business they barely have any cost they

just have the upkeep of the blog

so this is another company that i would

be interested in uh yes it's a little

bit more expensive uh currently they

list for

a thousand five hundred dollars if you

were to buy it right now it would be 144

000.

but since this is an auction you never

know if you're gonna get it so if i look

at the monthly profit i would say hey

this is four thousand dollars per month

which means that they make over forty

thousand dollars per year

um so this is something very attractive

and this would be worth paying up to

maybe

uh 20 30 even 40 000 because you could

recoup your revenue within just a year

of just buying this business and it's

very passive and write another blog

once per month once per week and add to

those affiliate sales

so overall i think this is a very good

uh company it says that she's an seo

specialist who builds websites

and it looks like she really optimized

it to be seo specialized so let's take

another look at the

at the google analytics it looks like 70

percent of traffic comes from seo or

from organic search which is a very good

thing so you do want that the average

engagement duration is three minutes

which is phenomenal

uh that means that people spend time

reading the article and then once once

they read the article they already have

the some cost of saying hey i've already

spent three minutes searching for this

uh one thing that i was looking for let

me just buy this through the affiliate

link they click on the link

and after that they buy the product

so overall this is another company that

i would put on my watch list

i would contact the seller and ask for

more information about the financials

and about her experience with his blog i

also would look at the reason why she's

selling this company

[Music]

it doesn't look like i can find her

right away on the spot but i would look

for why she's selling the company and

then see how you can add value to this

blog or to this website you always want

to just see where you can add value to

this website by either good articles

that you write about tiny houses or by

optimizing it for search engine

optimization or you can just use this

website as passive income because if you

spend let's say

one thousand dollars but you make four

thousand dollars per month you would

already recoup your money within less

than uh less than a month by far

uh but i assume this website will go for

much more than that so i'm currently

watching it uh after this video i'm

probably going to message the salary

because this looks very interesting to

me all right so there you have it this

is how i do my research on buying a

company online here's a bonus checklist

that i look for when looking at a

company's financials first what is the

listing price of the website what is the

average monthly income expense and net

profit over the last 12 months does the

seller have any way of bringing income

to the business outside of the website

for example through their own personal

branding through network or affiliation

with one or any businesses or companies

that i didn't know about and that's

usually what i look for and i just ask

the seller right i also look for the

multiple like how many months of average

net profit does this company have and

how fast would it take me to recoup my

investment if the company were just to

continue the way it is right now and

after doing all of this i usually look

for what is the company worth to me how

much would i be willing to pay for this

and then i bid something that is maybe

half of that but higher than the highest

bidding price at that moment i usually

contact the seller build up some rapport

and do some analysis and research on the

seller on the website do a deep dive on

the competitors and see if this is a

good fit for me would this make me some

passive income with let's say five hours

of work per week or two hours of work

per week and then i can make a decision

whether or not this is a good investment

but it is very important that you always

verify the numbers can you verify that

the numbers that they give you are real

that's why i always encourage people to

really meet with a supplier have them

screen share their uh seo or their

google analytics as well as uh their

paypal account or wherever they get paid

so that you can be sure that what

they're telling you is actually true all

right there you have it if you're

interested in seeing how you can find a

profitable company for as little as 500

check out this video because i go in

depth on how i do that on a different

website subscribe if you want to learn

more about investing or building your

own companies and let me know what your

thoughts were in the comments but until

then peace out