At our recent private digital training Boot Camp in Brisbane, we were fortunate enough to be joined by Thomas Smale, founder of FE International, one of the worlds leading website broker services for multi million dollar website sales. With a 94.1% success rate in premium high end website sales, he might just know a thing or two about what it takes to structure your website business for a highly profitable sell-out.
Thomas shared with us some incredibly simple tips on growing and selling a multi-million dollar website. Since FE International specialises in the sale of larger SaaS, ecommece sites and content websites his advice is highly relevant for our students wanting to grow their websites.
For many beginners online it can be really easy to over-complicate what it takes to structure and grow a really big website. But Thomas broke this down for us into simple, achievable steps that any one of us can implement.
Here’s a hint – you don’t need to re-invent the wheel! Take a listen below to some really great advice that Thomas has for us. As you’re watching, have a think about your own website business, and how you can use these tips to start scaling up your website to the next level.
CLICK ON THE VIDEO BELOW to hear from Liz & Thomas
Liz Raad: Hi, I’m here with Thomas Smale, the founder of FE International. We are very privileged to have him here at our bootcamp. And he just shared some really incredible knowledge about the website deals that he has been doing over the last few years, incredible growth in your company.
But what I’d like to talk about now is some of the insights that you gave us around growing a website. Because that’s what a lot of us are trying to do, grow those websites to build assets so that we can one day sell.
Simple steps to grow your website to $Millions…
In terms of growing a website, a lot of people make it very complicated. Can you give us your insights about some of the essences of getting a website from that maybe five-figure level up to that six-figure level?
Thomas Smale: I think firstly, a lot of people really do over complicate it. They think that a big websites must have more complex, really fancy, clever systems. The reality is that the bigger the website, generally the cleaner, simpler, and easier the processes are.
So the first thing to realize is once you have a system that works to make $1 or $100 online, you can repeat that 10, 100, or 1,000 times over. And that’s what really successful websites do. They don’t do 10 completely different things every day in a completely different way. They do the same thing and they do it 10 times or 100 times.
A lot of people think you need new ideas. Yes, you need to come out with new content ideas, but you don’t necessarily need to reinvent the wheel every day.
So, more content, do it on a consistent basis. It doesn’t have to be any more complex than that.
Liz: Yes, and some of the examples you gave were about websites that are six, and seven, and eight-figure businesses valuation, and they’re running on straightforward spreadsheets.
Thomas: Exactly. People think you have to have a fancy system, or like a good software product etc. Yes, those things can help you, but you can also do things with an Excel sheet.
Liz: That’s very inspirational. I found that really interesting.
3 Main Website Business Structures
So, you see a lot of deals coming across your table. Are there any specific structures of businesses that you’ve seen? Like, is there a difference between content and e-commerce, and you do a lot of SAAS as well. Do you see differences in valuation there?
Thomas: Yes, we deal with three main business models:
- Content businesses, so like affiliate websites, blogs, things like that (which is what is taught at the eBusiness Institute).
- E-commerce, that might just be selling on Amazon, or that might be their own store like using Shopify or something like that.
- And then SaaS businesses (software as a service).
Generally speaking, e-commerce and content businesses are similar valuation-wise. SaaS is slightly higher.
Having recurring revenue is more attractive for website buyers
The reason SaaS and software websites are valued higher, usually they have recurring revenue, which e-commerce websites don’t have.
So, for example, if you have a blog and you’re charging people like a membership fee, that could be worth just as much as a SaaS business because you’ve got the recurring revenue.
So you might be promoting, on a content website, an affiliate network that pays you, I don’t know, it might be $10 every month for someone you refer. So if you can find affiliate programs like that, you can get high valuations for content businesses. So yeah, generally, people will pay a premium for recurring. Hence, why SaaS generally sells for more.
Increase the value of your website by creating some form of recurring income
Liz: That’s really interesting. So if you’re building a content website, being able to get that consistent recurring income, if you can monetize like that, that will add to your valuation.
Thomas: Yeah it’s great. And it also helps you like running your website day-to-day. You know exactly how much you can spend in the next month on your business.
If you’re relying on ads, and you know you might make say $5K or $10K off your website, you’re probably only going to invest like $4K to be safe. But for subscriptions you know for a fact you’re going to make $6K, then you can spend $6K, if you want to reinvest everything.
Reinvesting in your online business is Key to Growing Your Website Quickly
Liz: That was another really interesting point you made about reinvesting. I think that some of us get a little bit too short-sighted in terms of, “We want the cash.” And that’s fine. But if you want a good, big website valuation, then you want it to grow quickly.
Thomas, you’ve seen some businesses that have just had phenomenal growth? We’re talking from tens of thousands $ to tens of millions $ within two or three years. And you said, the key to that is that reinvesting.
Thomas: Correct, it’s reinvesting. And you do have to make a personal decision how much you can afford to reinvest. But generally speaking, if you want to build a really big website, like seven, eight, maybe even nine figures, reinvesting is super important. That’s assuming you’re not already rich, or you don’t have some form of outside funding.
Most people we work with don’t have a $10 million trust fund, and they don’t have $10 million from a venture capitalist. It’s their own money, so reinvesting is key. And then if you do the same things over and over, every single month.
Liz: Compounding and compounding. That was very exciting to see some of the deals you showed us. So, we’re really grateful for you being here. And thank you so much for sharing your insights with us!
If you are interested in buying and selling content websites, SaaS, and eCommmerce websites, especially larger sized websites, then make sure you contact FE International Website Brokers. Founded by Thomas Smale they offer a highly personalised service and access to a large network of investors looking to buy and sell successful websites.