In 2023, the global ecommerce market totaled $6.3 trillion. People are spending more money online now than ever before.
If you don’t own a website, it’s time to invest. The online business sales marketplace has slowed down after 2022 and a it’s great way to diversify your investments.
Trouble is, websites aren’t the easiest thing in the world to understand, which can leading to costly missteps on your venture.
This article is a website due diligence checklist, which you can easily follow and sidestep common traps on your journey to becoming a website owner.
Website Due Diligence – Table of Contents
- Why is Due Diligence Essential for Website Acquisition?
- Step 1: Immediate Dealbreakers
- Step 2: Technical Due Diligence
- Step 3: Content Analysis
- Step 4: Website Traffic and SEO Analysis
- Step 5: Financial Due Diligence
- Step 6: The Day-to-Day Operations
- Step 7: Legal Due Diligence
- Step 8: Market and Competitive Analysis
- Step 9: Social Media and Brand Presence Checkup
- Step 10: Growth Strategies and Expansion Ideas
- Bonus: Common Pitfalls When Purchasing a Website and How to Avoid Them
Why is Due Diligence Essential for Website Acquisition?
Imagine buying a car without checking under the hood or taking it for a test drive. Sounds risky, right? The same goes for websites.
Website due diligence helps you:
- Verify Claims: Sellers might claim a certain amount of monthly traffic or revenue. It’s your job to ensure these numbers are legit.
- Spot Red Flags: Maybe there’s a sudden drop in traffic or a looming Google penalty. These are things you’d want to know before handing over your cash.
- Understand the Business: Beyond the numbers, you’ll get a feel for the site’s audience, content, and overall vibe. This insight is invaluable for future growth.
- Determine Fair Value: By understanding the site’s strengths and weaknesses, you can negotiate a price that reflects its true value.
Like Elliott Holland says, the easiest way to avoid buyer’s remorse is with meticulous due diligence.
Now for the due diligence checklist. Most of these steps can be done just with free tools most entrepreneurs should be using anyway, Google searches and speaking to the current owner. But I recommend a tool like Ahrefs to be able to get more accurate statistics, link profiles, keyword rankings etc.
Step 1: Immediate Dealbreakers
The world of online business acquisition is a bit like Tinder. You swipe on an interesting prospect, and if it’s a match, you start the due diligence process to see if it’s worth your time to say hello.
The preliminary assessment is where you get a feel for the website, its vibe, and its potential deal-breakers.
Website Impressions and User Experience
Just like you wouldn’t wear pajamas to a first date (or would you?), a website’s design says a lot about its professionalism and the owner’s attention to detail. Here’s what to look out for:
- Design Quality: Does it look modern and clean, or does it scream Web 1.0?
- Navigation: Can users easily find what they’re looking for? A confusing menu can be a major turn-off.
- Mobile Responsiveness: How does the site look on your mobile devices? With up to 70 percent of web traffic coming from mobile devices, a responsive website is a must.
Initial Traffic and Revenue Analysis
Ask the website owner for access to Google Analytics to see these statistics. If that’s not possible, use a tool like Ahrefs to do a bit of spying. You’re looking for:
- Consistency: Are traffic and revenue steady, or are there wild fluctuations?
- Traffic Sources: Where is the traffic coming from? Organic search traffic, paid ads, social media?
- Monetization: How does the site make money? Ads, affiliate marketing, product sales?
Recognizing Red Flags Early
Online business sales is a huge market and, unfortunately, attracts plenty of scammers, so check links from sellers with a URL checker before opening. Here are some red flags to help you spot a scam or just a bad deal right off the bat.
- Too Good to Be True: If the revenue numbers seem sky-high with little to no work, tread carefully.
- Lack of Transparency: If the seller is hesitant to share essential data or dodges questions, it might be a sign they’re hiding something.
- Recent Changes: A sudden spike in traffic or revenue just before the sale can be suspicious. It’s worth digging deeper to understand the cause.
The preliminary assessment is your first deep dive into understanding a website’s potential and whether it’s worth pursuing further. Remember, trust your gut, but back it up with data.
Step 2: Technical Due Diligence
The next step in the due diligence process is technical due diligence.
Let’s break down what you need to keep an eye on.
Domain History and Ownership Verification
The domain is the website’s address and its home on the web. Here’s what to check:
- History: Has the domain switched hands often? Frequent changes might be a red flag.
- Ownership: Ensure the seller genuinely owns the domain. Sounds basic, but you’d be surprised.
- Penalties: Check if the domain has any penalties from search engines. This can seriously hamper future growth.
Content Management System (CMS) Review
What platform or content management system is the website using?
Like Sisyphus’s incessant attempts to roll a rock to the top of a mountain, any search for “the best CMS” is doomed.
-Anna Fitzgerald, Hubspot
Many online businesses run on a simple WordPress-setup, while ecommerce sites might use a platform specifically designed for shopping like Magento. Some sites are built on an entirely custom-built framework. Check the following:
- Skillset: Make sure the platform matches your (team’s) skillset. If you can’t maintain it, it’s useless.
- Scalability: Make sure the platform has room for growth. While most modern platforms can maintain large websites, some do it less painfully than others.
- Support: Check that the platform is quick, mobile friendly and has an existing community or support base.
Website Speed and Performance Testing
Do not underestimate the need for speed. A lightning fast site will always outperform a slow one with a fancy design.
- Load Times: Slow-loading sites can turn visitors away and hurt search rankings.
- Optimization: Check for uncompressed images, unused plugins, or clunky code that might be slowing things down.
- Mobile Performance: With so many users browsing on phones, a site that’s slow on mobile is a no-go.
Step 3: Content Analysis
The content is the heart and soul of an online business website. It’s what draws visitors in and keeps them engaged. More often than not, it’s also the main revenue driver.
A huge part of website due diligence is understanding the quantity and quality of the content included in the deal. Let’s see what that looks like.
Plagiarism Checks and Content Quality
With AI content on the rise, you’ll want to check for two things.
- Plagiarism: Run the site’s content through plagiarism checkers to ensure it’s original. Duplicate content can harm SEO and the site’s reputation.
- Quality: Is the content well-researched, well-written, and valuable to readers? Or is it just spammy garbage generated by your friendly neighborhood GPT?
A quick pass through an AI checker can help you spot whether a piece was written by a human or churned out by a model before you commit to publishing it.
Content Strategy and Future Potential
Make a cursory assessment about where you could expand the content.
- Content Gaps: Are there topics or areas the current site hasn’t covered? These could be opportunities for growth.
- Monetization: If the site’s content is primarily informational, could there be potential for affiliate marketing, e-books, or courses?
- Engagement: Check comments, shares, and other engagement metrics. Are readers interacting with the content?
Remember, while design and tech are crucial, content is often the main reason visitors come to a website. It’s the voice, the personality, and the value proposition all rolled into one.
Take your time with this step.
Understand the content’s current value and its potential, and you’ll be well on your way to making an informed purchase decision.
Step 4: Website Traffic and SEO Analysis
Traffic is the lifeblood of any online venture. No visitors? No sales. Simple as that.
That’s why t