When I was a kid, I loved to write. At school, I had won writing competitions. Not because I know my grammar or for the use of long and incomprehensible words but because of my creativity. I remember getting 100% for one of my compositions and then, after losing marks for grammar mistakes, ending up with 71%…

When I was a kid, I always wanted to write for a living. I thought it would be cool to sit down and start writing on a sheet of paper (didn’t have a cool laptop back then ). However, the capitalism part of me knew back then it was nearly impossible for me to live well from writing stories.

Especially because my mother-tongue is French, the book market is very small in Quebec and obviously saturated. Most writers barely make enough to keep writing their whole lives and the “stars” already own the market.

So, I decided to use my creativity elsewhere; I completed a bachelor degree in marketing . And now, while I still don’t live from my writing skills yet, I feel that my childhood dream could become a reality.

Last week, I announced that we were buying another blog and that we were finalizing the transaction. Well the whole deal is now done and we now are the happy owners of Green Panda Treehouse !

Buying another blog, what for? Do you really have something else to say about personal finance?

Why buy another PF blog? Simply because it is a niche, a business model that we know and we get to master. I do not pretend that I know how to manage PF blogs and make the most money out of it (there are tons of bloggers who are better at this than I ). Yet, I know enough about the market to evaluate a blog and tell if I can make money from it or not.

Since buying Gather Little by Little Continues to be a great success for us, we were quite happy to make another purchase in short order. We were able to do it because we are reinvesting most of our profits back into the business so we can pay off our debt and work on other projects sooner. If there is one piece of advice that I can give, it would be to reinvest as much money as possible at the beginning of your entrepreneurial adventure. This has been by far my best investment ever!

Why Green Panda?

What I really like about personal finance blogging is the great number of niche markets served. You can specialize in credit vehicles, investments, frugality, student personal finance, personal finance in general, etc. For each niche, there is so much litterature available  and are many more books to be written.

Green Panda is personal finance aimed at people in their 20s. When you are still in college or you have just graduated, you are about to enter the most important phase of your personal finance. You will learn everything about credit, investments, frugality, insurance, etc. This is where most people make their best or worst moves. While you can get burned by your credit card abuse, you can also make your best moves by saving and buying a rental property early.

At times The Financial Blogger talks about a little bit more advanced concepts, I felt it would be great to get back to basics and share my own personal experience from when I was younger. This is definitely a great niche!

Hey Wait! There is an iTouch Giveaway going on!

If you are interested in participating, just take a look at Green Panda Treehouse and sign-up for the giveaway! Entry ends on Thursday, March 18^th!

If you liked this articles, you might want to sign for my FULL RSS FEEDS. Then, you will get my daily post to your email and can read it at any time. To subscribe CLICK HERE

Related Post

• Financial ramblings
• Financial Ramblings – Buying Gather Little By Little Blog Edition
• Why Buying a New Car When You Can Lease?
• Buying Bank Stocks or Not Buying Bank Stocks; That is the Question!
• Buying Stocks When There Is Blood in The Streets

I never thought it would go this fast, but we are presently buying another website! In the past few months, our online company has taken a major step forward in terms of increased traffic and making money . While we were paying our business debt with our surplus income, we started to shop around… again!

Buying a website is like going to the bakery and buying your favourite desert (crème brûlée anyone?). It’s fun and exciting and I can barely think of anything else except the moment you take that first bite! But while this is very exciting, we have to keep our feet on the ground and pay the right price for the right site.

Then again, perhaps more appropriately. I should compare buying websites to buying a property. Some do it because they fell in love with the prospect, we try to buy the best valued property at the right price. You need to look at everything under the roof and aviod getting impressed by some fancy decorations!

How we proceed to buy a website

I’ve already written a quick series about how to buy a blog a few months ago. However, there is always something to add about this topic . In my previous articles, I had concentrated more on how to price a blog and proceed with the transaction. However, I didn’t talk much about how to determine what you want to buy.

What we were looking for this time

Buying a website is an exciting adventure. There is always some risk involved for each party as you never truly know if the website will continue to grow or, gulp(!), collapse in a few months.

When we bought Gather Little By Little, we were looking at buying a very popular and well established blog. In fact, at the time of buying, GLBL was way bigger than The Financial Blogger. We wanted it that way because we knew we could learn a lot of things through this transaction.

This time, we wanted to buy an established website (more than 2 years) but we were not focused on huge traffic or readership. We were looking at a blog where we could use our experience to make it grow (and obviously pay a lesser price since it is not fully developed).

Why not creating a new blog on our own? Simply because it takes a lot of time to grow traffic and revenues when you start from scratch. You are better off buying a blog that has decent search engine traffic and build on this.

So the key points of what we were looking for were:

-         A Good quality personal finance blog

-         A Long history so it’s “Google friendly”

-         Good readership but with great potential

-         Page Rank of 3 (important for Google)

We were lucky as it didn’t take long to find the website, start the negotiation and come to an agreement.

We negotiated differently this time

While the purchase of GLBL took several emails of going back and forth with offer and counter offer (it was a big blog, so it was normal to have such negotiation going on), this purchase went quite smoothly. We started by offering our “homemade analysis” of the website and describe how we get to the offering price. Since it was a fair offer and we took the time to detail factors that influenced our price, there was much less negotiation.

When you complete any business transaction, I think it is very important that both parties find what they are looking for in order to end with a win-win situation. If it’s not the case, you may run into big problems sooner or later.

So, which site did we buy?

Sorry pals, no scoop for today… we are still in the transfer process so I’ll come back with more news once we fully own the website!

If you liked this articles, you might want to sign for my FULL RSS FEEDS. Then, you will get my daily post to your email and can read it at any time. To subscribe CLICK HERE

Related Post

• How To Buy A Blog Step 3: Finalizing the Transaction and Integrating the community
• How To Buy A Blog Step 2: Assess the value of a Blog Part 2
• How To Buy A Blog in 3 Easy Steps
• How To Buy A Blog Step 2: Assess the value of a Blog
• RRSP Season Is Starting November 1st, Be Ready!

So you find a blog you like and the author is ready to sell. You both agree on a price and you are now set to make the transfer. Wait! As is the case for any good business transaction, you should have a contract including several clauses:

- The price of the purchase.

- A non-competition clause (at least 12 months)

- What is being included in the transfer (rights over old posts, design, template, established network, an updated list of main advertisers, etc.).

- How the transfer will be done (when the payment must be completed, what will be transferred first, etc).

- An “after sale” agreement covering the duty to answer back the new owner’s questions during a specific delay.

- The payment method.

Once the contract is signed, you can now proceed with the transfer. I personally prefer going through escrow.com to complete the payment. They are a bit more expensive but they hold the money in trust until the website transfer is completed and satisfies the new owner. This is a safe way to ensure that both parties will be happy at the end of the deal (you want to make sure it is a win-win situation).

Other pre-transfer precautions

I would suggest to mention to the seller that the transaction details must remain confidential and to discuss on how the sale will be announced to readers. Your bread and butter comes from your loyal readers, you don’t want to upset them at the first contact.

In GLBL case, we decided to let the author write a “goodbye” post where he was explaining his reasons why he sold and thanking his readers at the same time.

A few tricks for a smooth transition

Once that you are in control of your new blog, you want to make a smooth transition for the readers. They need to get used to you and you need to get used to them. So here are a few things we did to make sure it was a success:

#1 Ask for pre-written post from the original author. This helped us maintaining the same writing style and diluting our own articles gradually.

#2 Organize a contest with giveaways. Readers love to win prizes, therefore, we offered a iPod Touch along with 2 gift cards at Amazon. To enter the contest, the reader had to say what he likes about GLBL or what he would like to read about. This was giving us a real good idea why GLBL was so popular and how to keep our readers happy.

#3 Read the blog to adapt your writing style. It is obvious that you can’t copycat perfectly the author but it is interesting to know what readers expect in term of topic, length and style (polite, trash, conventional, funny). You can slowly turn your post towards your own style but you are better off doing it after a few months .

#4 Adapt! We have made a few mistakes in our first articles and we corrected them to make sure we don’t go sideways. You will obviously face people that are not happy with the situation. You just have to listen to them and decide if you want to take their advice or stick with your own direction.

Overall, after 6 months, Gather Little By Little didn’t lose much readership as our RSS feed shows about the same thing and our traffic didn’t drop either. However, it took us this 6 months to operate the transaction smoothly. The Blog didn’t grow in term of traffic for the past 6 months. When we look at other websites, they all have increased their readership and daily traffic. This is to show you how hard it is to put on someone else’s shoes when he has been running in them for the past 3 years!

If you have any questions about brokering such deals, please feel free to comment or send me an email!

If you liked this articles, you might want to sign for my FULL RSS FEEDS. Then, you will get my daily post to your email and can read it at any time. To subscribe CLICK HERE

Related Post

• How To Buy A Blog Step 2: Assess the value of a Blog
• How To Buy A Blog Step 2: Assess the value of a Blog Part 2
• How To Buy A Blog in 3 Easy Steps
• Getting Ready for Another Purchase!
• Paid off car: one more step to financial freedom!

Yesterday, I wrote about what I consider important in the process of evaluating a blog. This is a crucial step as, like every business transaction, it will determine if you can find a good deal. I have always considered buying blogs as if I was going to the store to buy myself a small “money making machine”. You want to be relatively sure that your machine is in good order and that it can generate enough money.   Ultimately, your goal is to generate profit for your pocket over the long run after getting back your initial investment.

What I really like about buying a blog is the market ratio for the purchase. As I mentioned in my previous post, you should consider 12 to 24 times the monthly income as a fair price. If you take care of your new money making machine, you should be averaging 50% investment return annually… not bad huh? So my objective is to know if I can get back my initial investment within 18 months by working on the blog.

I am reluctant to invest more than 18 times the monthly income as 2 years is an eternity on the internet. Rules change quite fast and it is very possible that making money with blogs may become virtually impossible 12 months from now… Just imagine if Google changes its Adsense policy? Or start penalizing blogs for affiliate posts?

Finding the right price

If a blog makes $100 per month; I will start negotiating the price at 12 times the income, so $1,200. The market usually considers gross income as running a blog is almost free. I also consider gross income because it is almost net income before taxes anyway However, it is very important to request the maintenance expenses. If the seller is spending $500 a month on promotion and/or writers, this should be taken out of the gross income… and I should talk about net income instead of gross in order to avoid any confusion

Then, additional months up to a maximum of 24 (the multiplier) can be added for:

- Strong and steady traffic from search engines,

- RSS readers and community size,

- Income stability,

- Income diversification and

- Blog history (number of years and number of archived posts)

And you can use these arguments to lower the seller’s expectation:

- Risk of losing readership since most people visit the blog regularly for the author… and he is leaving!

- The blogging industry is fairly young, there are several risks involved when considering blog survival over the long term.

- The market for blogs is practically illiquid (this is why so many people wondered how I valued GLBL). There are few market comparisons to be made and most transaction prices are confidential anyway.

In the end, I must say that there are no black and white answers. I wish I could build an evaluation chart as Financial Analysts do using ratios while considering the fundamentals of a company.

So far, I have bought 4 sites. The first three were paid off within 12 months of the purchase date. They are now generating “pure” profit in my pocket. However, these sites were not too expensive (between $1,000 and $2,000 for each of them). Obviously, it was easier to make our money back faster. Gather Little By Little will be another story as we don’t expect paying it off as fast.

We are currently building our company through internal growth and acquisitions. While growing through acquisitions has an immediate effect, it is important to proceed one purchase at a time. You don’t want to upset your new readers and want to make sure to care for the blog so it can continue to grow within your company. The next post will be about finalizing the transaction and integrating the new blog community.

In the meantime, we are entering in a new “buying period”, so drop me an email if you consider selling your blog

If you liked this articles, you might want to sign for my FULL RSS FEEDS. Then, you will get my daily post to your email and can read it at any time. To subscribe CLICK HERE

Related Post

• How To Buy A Blog Step 2: Assess the value of a Blog
• How To Buy A Blog Step 3: Finalizing the Transaction and Integrating the community
• How To Buy A Blog in 3 Easy Steps
• Getting Ready for Another Purchase!
• Financial Ramblings – Buying Gather Little By Little Blog Edition

I received many emails regarding how I appraised the value of Gather Little By Little! It seems like there is a great interest in making money online and as a result buying blogs can be quite appealing. However, I must say that making money definitely looks easier than it is! While all information related to the transaction of GLBL must remain confidential, I will explain what to look for and how to obtain a fair value for both parties.

Before we start looking at how much you should pay for a blog, we have to know what we are looking for to determine the right one.

Traffic, traffic, traffic, what traffic?

Some blogs show amazing traffic stats. Steady traffic can be worth a lot of money. Advertisers need exposure and you need several thousand visits in hopes of making a decent income through affiliate programs. But beware of traffic sources.

I personally give little or no attention to social bookmarking site traffic like Stumble Upon, Digg or Tip’d (for financial websites). The truth is that most visitors coming from these sites won’t stay on your blog very long and chances are they will never come back.  When it comes down to converting those visits into revenue, they are worth a big fat $0 (are we here to make money online or what?).

RSS readers and The blog community

The biggest power of a blog is its community. A blog with a strong, active community will most likely grow faster in the future as people talk about your blog with friends and family. There are 2 ways to know how big the blog community is:

- Number of RSS readers and followers on Twitter.

- Number of comments on each post.

RSS readers and followers are great if you want to reach many people for a specific purpose. While it is not recommended to use this publishing method to do heavy self promotion, an affiliate post once in a while won’t hurt your readership. In fact, if you write about a great product or service that really can really help your readers, it will probably have a great impact.

The average number of comments will show if your readers are willing to participate actively in your blog. This is entertaining for other readers and can become a great source of inspiration when you wonder what to write next.

It’s all about money!

Most sellers will tell you about the unexploited potential of their blog due to lack of time or resources. I actually don’t believe in “unexploited potential” from the seller. If you know that your blog could easily make more money than it is right now, why the hell have you not done it prior to selling your blog????. By doubling the blog income, you could probably double the price. Better than that, what would you have been doing with all this money for the past few months! Who would actually denounce the ability to make more money? So, concentrate on what is being made right now.

A rule of thumb says you should value a blog by calculating 12 to 24 times its monthly income. Therefore, if your blog is making $100 a month, it should be worth $1,200 to $2,400. However, you must consider the following points when regarding income:

- Income consistency

Take the average of the last 6 months and pay particular attention to note if the income is increasing or decreasing! If one affiliate post contributed as most of his income during a particular month, substract this income spike in order to understand the full and real picture.

- Income sources

Is it the classic Google Adsense? Through affiliate programs (then you would have to create new user accounts and switch links!), by selling links? Banners? The more sources the better. If you have only one sponsor, you better make sure he has the intention of pursuing his agreement with you after the sale!

- Valid proof

Ask for several cross reference sources of proof like PayPal print screens and user account print screens. While this won’t guarantee you anything, the seller will have to do much more work and may make a mistake.

All right, enough information for today. Tomorrow, I’ll outline how our buying model works. Stay tuned

If you liked this articles, you might want to sign for my FULL RSS FEEDS. Then, you will get my daily post to your email and can read it at any time. To subscribe CLICK HERE

Related Post

• How To Buy A Blog Step 2: Assess the value of a Blog Part 2
• How To Buy A Blog Step 3: Finalizing the Transaction and Integrating the community
• How To Buy A Blog in 3 Easy Steps
• Financial Ramblings – Buying Gather Little By Little Blog Edition
• Paid off car: one more step to financial freedom!