8 Due Diligence Tips Every Web Entrepreneur Should Know
One of the biggest fears facing aspiring website entrepreneurs is the topic of due diligence. No one wants to fall victim to a scam and if a deal seems too good to be true, it typically is. While our guide will help you get started in learning about due diligence involving the purchases of websites, you should always use your own discretion in your personal business dealings.
Request Read Only Access to the Website’s Google Analytics Account
After all, anyone can fake screen shots and post them on Flippa. Browse though the Google Analytics visitor data in efforts to see where much of the traffic is coming from. Is the website getting organic search engine traffic? What about links from pay per click campaigns? Google Analytics is a treasure trove of information for finding out the truth about the website you are interested in purchasing.
Research the Domain Name’s Past
What if you bought a domain later to find out that the domain itself has been blacklisted due to the domain pumping out spam? Is your domain name infringing on a trademark? Buying a website is a major financial decision for entrepreneurs and it might be worth the investment to purchase the $50 per month Domain Tools membership package so that you can get the full rundown on the history of a domain name.
Always Use an Escrow Account
Especially with deals that take place with website sellers who live in a different country than you. Remember, if someone from outside of your country operates outside the bounds of your explicit agreement, it could be difficult to get legal recourse in your unique situation. That’s why you should always use an escrow service to facilitate the transfer of funds for your website deal.
Go Back, WayBack!
When you buy a website, you should always use the Wayback Machine in efforts to see the history of the domain. The Wayback Machine caches websites on the internet and allows them to be retrieved. You can even go to the Wayback Machine and look at what Yahoo.com looked like in 1995. The Wayback Machine will tell you if anyone has tried to use the domain in the past for services not related to the website you plan on buying. This will also give you a clear visual history of the website you are thinking about buying.
Compare Values of Similar Websites
How do you know that you are getting a fair deal? Much like shopping for automobiles, you can use the historical search features found in places like eBay or Flippa to get an idea of what similar websites have sold for in the past. Remember, people can ask whatever they’d like for a website. It is important to compare previous sale prices to the current asking price to ensure you are getting a fair deal.
Chart the Future Trajectory of the Website
Depending on the niche, you could be buying a business that’s 100% seasonal. How do you know that the website will perform as well in the next upcoming season? How would you know the website would have any traffic at all? Research a website’s backlinks to see if the website is cited among websites that ranked highly using Google’s PR methodology. When high ranking PR websites are linking into the website you are looking to buy, it usually means good things.
Research the Person or Business Selling You the Website
The internet is a plethora of information and businesses typically have public information listed about them. Is the person selling you the website the person they claim to be? Does the person selling you the website have a valid address that can be looked up on Google Street View? Does the business have a listing with the local Chamber of Commerce or Better Business Bureau? Be wary of sellers who require money upfront or sellers that do not have an online identity with verified reviews.
Look At the Code
If you are buying a prebuilt website, why not go ahead and inspect the code? This will give you an idea of the craftsmanship involved with crafting the website you are buying. Since the HTML code is public, you should just be able to right click on the page and view the source. This code will give you an idea of the level of coding expertise needed to update the website with any future changes.