If you are looking to pump all your money into the first website you come across, here are some pointers on how not to invest.
You can’t take it anymore.
All this yawping about the huge ROI everyone is making with website investing. (You don’t know someone that is really making a lot of dough by investing in digital assets, but from what you hear, and read, you gather everyone is.)
Assuming you’re not fancying the least risky and most labor-intensive way to ride the wave- learning the ropes of internet marketing, building a digital asset from scratch, and maintaining it for a few years– you’ve perhaps been mooning around about all the money that is there to be made in digital asset investing.
Well, you can keep dreaming. No harm done.
Because, on the odd chance that you happen to acquire a web property that appreciates manifold, you’ll either sell it too soon and miss out on larger profits, or hang on to it for too long and end up exactly where you began. Or, in the worst case, you will also pick up half a dozen web properties that go to zero, one after another, and, between this string of losses, fees, commissions, taxes, and therapy bills, you’ll finally conclude that you could have done a lot better doing something else.
Should this happen to you, don’t be too livid with yourself. Most rookie investors who mistake the website investing for a ticket to fortune end up having a similar experience.
With that in mind, in this blog post, I am going to come clean about something you all should have suspected, if you are looking to dip your toes in the waters of website investing.
Note: Many of these points are valuable, yet new website investors often fail to heed them.
Successful website investors work out a clear plan, and they follow it through. The rookies, on the other hand, spurred by over enthusiasm, tend to go all in without a solid plan, like a ferry without a compass, and get stuck at sea.
A well thought-out website investment plan helps you figure out your objectives, your entry and exit points, the amount of money you will invest in a particular asset, any likely risks that are attached to it, the amount of money you’re ready to lose, and your strategy to diversify your portfolio.
Newbie investors who formulate a plan may have a tough time sticking to it, and take a different stance whenever an asset fails to perform as expected. That said, in any case, sticking to a plan you set for yourself will help navigate through things when the going gets tough.
Not having a plan in place can only cause you to stumble and make poor decisions that set you back.
Investing in a web property is great for your future, but when you invest more money than you can afford, that is certainly not a good sign.
I remember working with an investor who was scrutinizing a listing that had an asking price of $100,000. He liked the value proposition of the business and wanted to buy it badly, so we sat down to discuss things with the seller. He had just $50,000 for the property, but that was not going to be enough to seal the deal. He needed to come up with at least $75,000 to get the seller interested. A week later he called up to tell me that he could dip into his savings account and access a few sources including his nest egg to make up for the deficit.
I asked him not to invest in that website.
Investing in an internet business is quite risky. Granted the huge returns in the offing, it is a risk worth taking. However, you need to examine its risk profile and understand the risks of investing all your money in it.
Whatever the case may be, do not invest what you don’t have. In so doing, you also give yourself a realistic chance to earn back your investment in a reasonable amount of time.
A real website investment is not made on any speculation, or on the basis of an income report that you read, but on a great opportunity that you identify- the one that seems to pay off on the long term thus justifying the risk involved.
New website investors tend not to do their legwork on the assets that they are looking to buy. More often than not, their experiments with investing in websites are little more than shots in the dark.
You should never play the guessing game with website investing; you may as well play a game of roulette.
You should try to collect and track enough information about all the assets so that you can attempt to make well-informed decisions about the web properties you can put your money down. Alternatively, you might want to hire a professional website management agency that can do all the dirty work for you like due diligence, negotiation with the seller, transferring the asset and the daily management once it’s transferred to you.
As investments, web properties come with a certain level of risk. Newcomers, quite often, don’t estimate the risk of the assets they want to invest in, or their own degree of tolerance to that risk. Failure to do so can only cause them to take poor decisions that land them in a bit of a situation in no time. On the flip side, taking an overly risk-averse stand might deprive them of real opportunities to invest in assets with a lot of potential.
As with most things in life, it is quite important to find your balance. It is all about appreciating the fact that every web property is a risk in itself, and also identifying the risk boundaries that you are ready to push. Your tolerance to risk will help determine the assets you are likely to have success investing in. So assess your risk profile and figure out what you stand to gain as well as what you stand to lose.
Web properties in which you stand to gain a lot more, usually come with a greater amount of risk. Yes, there are many safe bets as well. Delve a bit deeper and pick these assets carefully so you can be fairly confident that they will rise in value, and bring you a huge ROI when you sell them off.
Don’t bet the ranch. Try to learn everything you need to before investing your money, stick to the plan, and your first investment just might reap great rewards. You’ll thank yourself later.
Newbie investors, if they are not doing their homework, often make decisions based on what appears to be a pretty good deal. They’re enamored right off the bat and fall victim to easy scams. Assets that look appealing at first glance may not necessarily be the most lucrative opportunity so appraise all the deals out there before finally picking one.
Many first time investors tend to pay a high price for a hot web property hoping that it will hold its value in the long term. On the other hand, there are newbies that see the bright side in investing their money in safe bets (digital assets that are sold at fairly low multiples), but that is far from true. Sometimes sites that are sold at low multiples can be quite worthless, as well.
It all boils down to the value and the potential to grow. Seek high-value assets in the marketplace and invest your money carefully based on real reports about traffic, revenue and other aspects that matter. Just don’t be too fixated on price.
There you have it.
Investing in websites is not as easy as you think it is. I’ve known people that entered the market with great optimism, only to find themselves squelched just after a few months into it.
That’s the bitter truth of what you can expect if you fail to exercise caution and figure out things before putting your money down.
You would really do well to learn from these mistakes before you find yourselves lost.
Mohit Tater is the founder and CEO of BlackBook Investments through which he helps people invest in online businesses and digital assets. Apart from advising clients on SEO and marketing he also blogs at mohittater.com.