What to look for when buying a forum?

By LeeD · Jun 10, 2005 ·
  1. LeeD
    Title: What to look for when buying a forum?

    I have been asked this question so many times. My first response is always, “Ask questions!” When buying an existing forum there is so much that can be learned from doing some simple research, you as the buyer can really make an educated and intelligent decision. I will walk you through many of steps of research that I take when looking to buy any web site, but in this case specifically forums.


    Traffic

    First, I want to take a close look at the community’s traffic. I am looking not just at unique visitors, but at visits, page views, and bandwidth usage. I want to be able to analyze their traffic, looking for traffic patterns, peaks, lulls, etc. All of these factors will help me to know which questions to ask the seller so that I can ultimately have a bigger picture and better insight in to what I may be spending my hard earned money on. For example, you have a community that has been consistently getting 200 unique visitors a day and 18,000 page views. In the recent months, the stats show that traffic has climbed almost instantly to 600 uniques visitors each day and 22,000 page views (not the same visit to page view ratio anymore). A warning light should go off in your head. Likely this seller has given his legitimate traffic a boost through some paid traffic source to show more value for the site for sale. I may not lose complete interest, but I would definitely have my concerns and look closely at the true picture. Be sure to always look closely at the referrer logs to see where the traffic is coming from? Where does google rank on the list? Yahoo? MSN?
    So, what is a good amount of traffic? I feel like it is dependant on the community. I know very active communities that get 300 unique visitors each day and some that aren’t much more active in terms of posts and new threads even though they get 2,000 unique visitors a day. Obviously traffic adds value, so expect to shell out more dollars for those higher traffic site in the x,xxx to xx,xxx unique visitors a day range.
    Here are some tools I use to determine how well the site is positioned in the search engines. This step is a must if you plan to do your homework!

    MarketLeap Link Popularity Check
    MarketLeap Search Engine Saturation

    Visit Yahoo, MSN, and Google and perform these searches on all three engines:
    Site:www.sitenamehere.com and Link:www.sitenamehere.com

    www.alexa.com can be a decent (only decent, not good) tool for the larger communities.

    http://www.pageranktool.net/ - a good tool to check Google PageRank


    Activity

    I am not talking traffic anymore, but rather the forum activity. Now, most forum software makes this quite simple to determine. vBulletin for example has this built in to the adminCP (Admin Control Panel), where the seller can easily tell you how many new posts a day, new threads a day, members online in a day, new member registrations per day, etc. I recommend you know all of those things prior to making a decision. This will shed even more insight as to the value of the forum you are looking to purchase. If the forum has a good amount of registrations and very little posting activity, take a close look at the features and functionality of the community. Maybe it is a simple case where the new member isn’t being pulled in past the registration point, or maybe there is some navigational or functionality issues. These are really good signs when I am looking at a site for sale. This means that with very little effort and time, I can make a few small tweaks, and see instant gratification as the new owner. The warning signs come in the form of inactivity, only a handful of members “carrying” the board, or even great activity and content with little to no growth (rarely happens, but it can).


    Revenue

    Typically you as the buyer are going to pay anywhere from 6-36 months of the site's revenue. Now if the site is new and not making any money or very little, than this will obviously not be very accurate. This is however a very good rule of thumb. If a site is generating $100 in monthly revenue, then you will likely pay no less than $600 and no more than $3,600. Now why the 30 month range you might ask? There are several reasons as to why someone would pay 24 months revenue versus 8 months revenue, so let’s take an even closer look.


    Closing Thoughts

    Look at buying a forum like buying a standard service business for sale, a business such as a plumbing company. The factors you look at are revenue, location, new customer flow, repeat business, average ticket amount, and time in business. With a web site we are looking at several things:

    Time: One of the most important is the length of time the site has been online. You simply can’t make the same amount of progress with a forum in 2 months as you can with one online for 2 years. Many things just take time!
    Consistency: How long has the site been making money? Is it steadily growing and if not, why? Have there been some drastic increases in revenue and if so, what is the source? Are there several sources of revenue, so that if one falls a part all is not lost? A history of consistency goes a long way when buying a forum.
    Market:Who is the market? What population, what gender, and what genre? Is the main topic of discussion a quickly passing fad, or is there a long term stability to be had?

    Even when all these questions have been answered by both you and the seller, don’t stop there. Ask people you trust for advice and look to see what the competition is doing. Verbally communicate with the seller whenever they are willing, as it will really give you a better feel for the things. Good luck and may your next forum purchase be a great success!


    Forum Purchase Example:- Site A makes $100 a month and has a decent amount of traffic, no unique content, new in the search engines, has some forum activity but not much, and most of the traffic comes from Pay-Per-Click ads. You might look to purchase this site for 6-8 month’s revenue or $600-$800 for the site.

    - Site B makes $100 a month and has good unique content, a busy user base, a good number of back links and most or all of the traffic is coming from the search engines. You would likely pay 12-24 month’s revenue or $1,200 - $2,400.

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