opinion

Expanding a Business via Acquisitions vs. Building From Scratch

Expanding a Business via Acquisitions vs. Building From Scratch

Twenty years ago, I was fresh out of high school, living in my first apartment and almost broke. That’s when I spent my last $300 on acquiring a small website. I had hopes and dreams of making $1,000 per month, but it was not going well at the start. I knew some HTML, but was immediately in trouble because the website was written in PHP — and I didn’t even know what that was (my due diligence skills were not as honed as they are today). So, faced with potential failure, I did what anyone else would do: I taught myself PHP and revitalized the website.

In my first year, I earned double what I had set as my goal. And while I fell into the usual trap of purchasing stupid shit I didn’t need (that most people go through when they start making decent money), after that, I began to use revenue to acquire more web properties. My strategy was to focus on websites that were under-earning because they needed attention and renovation.

While it had been a website that I had built from scratch that provided my seed money for the first website I bought, it was the acquired websites (and the work of the previous owners) that attributed most to my long-term success. In the years that followed, I would code and build JuicyAds from scratch to service the advertising needs of those websites, using the same programming skills that I had acquired out of desperation.

So, which is better? Buying a website or building it from scratch? Well, that depends on who you are and what resources you have.

I’ve been buying and selling websites (and businesses) for two decades. Web properties are the sum of years of effort (and sometimes large amounts of money) from the owner. My decision to ultimately sell my empire 10 years ago this autumn was to focus on JuicyAds. And much like myself, most people I help at Broker.xxx are selling their websites to focus on what they believe is going to be the bigger and better thing.

When considering building a brand-new site rather than acquiring, it is similar to building a house. Do you have the funds, skills, ability and vision to build something yourself or should you hire people? Or are you looking for a deal on a “fixer-upper” that you can take and renovate into something better?

For most, it is better to acquire than to start something from scratch, unless you are creating something that doesn’t exist yet. It can be a lot easier (and faster) to take a boulder that someone else has already started to roll up the mountain, rather than start pushing it yourself from the bottom. Most importantly, a plan on how to accelerate traffic and revenue to recoup the purchase cost as quickly as possible is critical.

During my acquisitions, I always used my knowledge of what affiliate programs sold well (and, more importantly, which ones didn’t) to revamp a website’s offerings quickly (akin to buying the worst house in the best neighborhood and renovating). This strategy allowed me to purchase digital properties and recoup the purchase price in just six months.

It is far more challenging to start a website from scratch, especially if you don’t have the programming skills to hack it yourself. It is expensive to hire someone else to build when you have no technical knowledge, and that often keeps people from realizing their dreams, no matter how brilliant the concept is. At least with an acquisition (depending on its size and traction), a buyer would have cash flow soon after purchase and can use that to change and revitalize the website in the vision of its new owner. You will know you’re on the right track if those revenues keep going up, following your focus and the energy put forward. Juicy Jay is best known as the CEO and Founder of JuicyAds, the Sexy Advertising Network, but also helps people buy and sell websites and businesses with his Broker.xxx brokerage.

Related:  

Copyright © 2024 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More Articles

profile

WIA Profile: Samantha Beatrice

Beatrice credits the sex positivity of Montreal for ultimately inspiring her to pursue work in adult entertainment. She had many friends working in the industry, from sex workers to production teams, so it felt like a natural fit and offered an opportunity to apply her marketing and social media savvy to support people she truly believes in and wants to see succeed.

Women In Adult ·
opinion

Understanding the Latest Server Processors

Over the last decade, we mostly stopped talking about CPU performance. Recently, however, there has been a seismic and exciting change in the CPU landscape, due to innovation by a chip company called Advanced Micro Devices (AMD).

Brad Mitchell ·
opinion

User Choice, Privacy and the Importance of Education in AV

As we discussed last month, age verification in the adult sector is critical to ensuring legal compliance with ever-evolving regulations, safeguarding minors from inappropriate content and protecting the privacy of adults wishing to view adult content.

Gavin Worrall ·
opinion

Maintaining Payment Processing Compliance When the Goalpost Keeps Moving

VIRP is the new four-letter word everyone loves to hate. The Visa Integrity Risk Program went into effect last year, and affects several business types — including MCC 5967, which covers adult and anything else with nudity, and MCC 7273, dating services that don’t allow nudity.

Jonathan Corona ·
opinion

Making the Most of Your Sales Opportunities

The compliance road has been full of twists and turns this year. For many, it’s been a companywide effort just to make it across that finish line. Hopefully, most of us can now return our attention to some important things we’ve left on the back burner for months — like driving revenue.

Cathy Beardsley ·
profile

YourPaysitePartner Marks 25-Year Anniversary Amid Indie Content Renaissance

For 25 years, YourPaysitePartner has teamed up with stars and entrepreneurial brands to bring their one-stop-shop adult content dreams to life — and given the indie paysite renaissance of the past few years, the company’s efforts have paid off in spades.

Alejandro Freixes ·
opinion

WIA Profile: B. Wilde

B. Wilde considers herself a strategic, creative, analytical and entertaining person by nature — all useful traits for a “marketing girlie,” a label she happily embraces.

Women In Adult ·
opinion

Proportionality in Age Verification

Ever-evolving age verification (AV) regulations make it critical for companies in the adult sector to ensure legal compliance while protecting the privacy of adults wishing to view adult content. In the past, however, adult sites implementing AV solutions have seen up to a 60% drop in traffic as a result.

Gavin Worrall ·
opinion

Goodbye to Noncompete Agreements in the US?

A noncompetition agreement, also known as a noncompete clause or covenant not to compete, is a contract between an employer and an employee, or between two companies.

Corey D. Silverstein ·
opinion

The Search for Perfection in Your Payments Page

There has been a lot of talk about changes to cross sales and checkout pages. You have likely noticed that acquirers are now actively pushing back on allowing merchants to offer a negative option, upsell or any cross sales on payment pages.

Cathy Beardsley ·
Show More