Is Buying Websites For Investment A Scam?

By Jamie McSloy / March 29, 2018
flippa buying websites investment scam featured image

Let’s talk about Flippa and buying websites.

Now if you’re a regular member of the blog, you know we’ve done this before.

In fact, most of the articles about this are private, password protected posts.

And so, if you know what’s in them, you’re probably thinking, “Jamie… you’re not going to give away the goods are you?”

And the answer is… not really.

Check this guy on Reddit out:

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This is, and I don’t mean to be rude in case the guy ever reads this, but this is a text book example of someone making all the mistakes possible in business.

Put a little tick next to the following:

  • Throws lifesavings into business without knowing what they’re doing
  • Assumes the business is going to run itself and make a profit
  • No research before buying
  • No skills to leverage
  • Blames lack of success on “the market”
  • Quits while behind
  • Looks and sees new shiny objects and thinks they’re “better”
  • Wants confirmation from other people about whether something is a scam or gold mine

So… we’ve got a set of lessons here and the above is a cool blueprint for the opposite of what you actually should be doing. This is true whether you’re buying websites on Flippa or doing any business stuff.

What should you do?

Don’t Invest Money Before You Invest Time

I can tell you one investment that’ll never pay off.

Putting money into any business that you have no experience in or knowledge of.

It doesn’t matter if you buy a website or you buy a restaurant. Here’s the thing: businesses get ahead and stay ahead by being better than any other offer out there.

If you buy something without researching it, you don’t know what the best offer is or whether your company has it.

If you don’t know what you’re doing, then there’s no way you’re going to be able to find an angle where you outcompete people who do know what they’re doing.

Take Flippa for instance. There are people who build websites who have years of experience. People who know how to get traffic. People who know how to monetise traffic.

Those are the people you are competing against.

If you have never run a website before, then get a domain for $10, some web hosting for $3 a month and then write some articles, post some pictures and learn what it takes to get traffic and sales.

If you cannot do this, you need to learn. It’s better to waste $50 on a website you build from scratch than $5000 on a website that is doing OK but turns to rubbish because you don’t know what you’re doing.

The Grass Will NEVER Be Greener

This guy talks about whether the business is better now.

It isn’t. It won’t ever be.

Any business landscape has its challenges. When I first started building websites for fun as a student, you had to handcode them because WordPress was a new thing.

In fact, I remember they used to charge for WordPress if you wanted to install it on your own site. That’s crazy looking back at it.

So you’d think that that was a terrible time for websites, right?

Yeah, unless you were one of the people making a killing from the dotcom boom.

People will talk to the “glory days” of dropshipping. I had a dropshipping store back in 2010 and it was a pain in the arse. Hardly any companies dropshipped and you had to pick up the phone and call them to ask.

There was a lot less competition but a ton of things simply didn’t exist. Alibaba didn’t exist. There weren’t easy dropshipping systems which fulfilled orders for you. There was no Shopify and no Woocommerce.

Customers couldn’t cope with returns and ecommerce was actually more trouble than it was worth.

On the other hand, some people made out like bandits.

When a business becomes easier, competition increases. When there’s a gap or niche that hasn’t been fulfilled, there’s more money but the job is tougher.

As Always…

As always, your skills and other advantages make and break your success.

With buying and selling websites, the seller is banking on one thing:

Their site is worth more as a sale than their continued cost of running it.

So if a person is selling their site, they’ve decided that it’s worth less than keeping it. So, they can sell it for $3000. If it makes $100 a month, that’s fair. It’ll take them nearly three years to make that money, and they’d rather have it now.

If you have no skills or other advantages, you’ve wasted your money. That $100 a month will drop to $50 and then trail off because you’re not adding to it.

So it’s a bad sale for you. Great sale for the seller.

If on the other hand, you can take a website that earns $100 a month and triple it to $300 a month, then you’ve won. You’ll pay back the investment in less than a year and it is pure profit from there. You won’t get that investment return out of a bank, that’s for sure.

Now, you might think, “Why would a person sell if they could triple their income?”

That’s why your skills and angles are important.

Getting a website from $100 to $300 a month isn’t impossible.  In fact, sometimes weird quirks are all it takes. Change a button colour and the conversion rate jumps 3%. Add a few SEO articles and you get 1000 more visitors. Rewrite some of the pages and see conversion rates triple.

A lot of store owners will sell because they can’t make any more money. Their ceiling isn’t your ceiling.

You need to know what you’re doing. Learn that first, then try and profit.