It was sad, we shed a tear, and got over it.
This post is about the what Rob and I will do now that we clearly see that the value of the site is down as of March 2017…The REALITY of making high risk decision with incomplete data.
Be sure to check out the previous 7 posts if you haven’t read them yet.
Business is full of surprises:
If you work for a corporation, like I did, you may get laid off when the market slows down. I was laid off in July of 2015.
If you work for a small medical billing company, like my wife did, you might get laid off when it is losing market share or when laws change. My wife got laid off two weeks before Christmas in 2016.
Or if you run an affiliate marketing business on the platform of one of the biggest retailers in the world and they change the commission rate, you might take a massive pay cut.
Check out the timeline for my affiliate marketing journey — It’s a roller coaster!
The ability to adapt to changing conditions is a great skill to have. Internet marketing changes fast, and as marketers we need to accept that fact and react quickly.
It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.
I’m happy to say that Rob and I have been able to adapt as partners without any reservations.
Sunk Cost Fallacy
This is a behavioral economics concept. I became most familiar with it after reading the Freakonomics books, and now, I’m better equipped to deal with it.
The Sunk Cost Fallacy is when you keep doing something simply because you’ve already invested time, money, or effort in it.
Even though we know that continuing to invest time, money, or effort is a waste we keep doing it.
- If you go out to dinner at an All-You-Can-Eat restaurant, then you overeat until you feel sick just to get your money’s worth. (I’ve lost about 20 pounds by not frequenting such establishments over the last few years.)
- If you’re at a job you hate and have been for years, but stay there anyway since you have seniority.
- If you start a niche site, spend 6 months working on it, then realize it’s a terrible niche that can’t be monetized well, but you continue to spend time on it.
Amazingly, Rob and I are exceedingly pragmatic and rational people. I’m probably hyper-rational and lack some emotion, but in this case for Project Go White Hat, it’s really a great asset.
We aren’t falling for the Sunk Cost Fallacy, and if I explained it well, then you already know what I’m about to say.
Rob and I aren’t chasing this short-lived dream to sell a niche site for $500,000.
Yep, even though I proclaimed such on this blog and within a few guest posts. Does it mean I lose credibility? No, not necessarily.
From where I sit, the rules of the game changed. Things are different than six months ago or even two months ago.
Let’s review the two main options:
- Try to sell the site for $500,000 which requires increasing the revenue by about 2x. That’s no simple task given the level of revenue. Doubling the revenue of a site making $100 or $1,000 is easier than going from $8,000 to $16,000. Could it be done? Yes. How long would it take? It’s hard to say but at least a few months in the best case scenario, and I can tell you the best case pretty much never happens.
- Finish out the original plan, which is to get rid of the PBN links and obtain 45 guest post links to replace them. Then, sell the site as fast as we can since we are behind the original schedule.
Doubling the revenue of a site making $100 or $1,000 is easier than going from $8,000 to $16,000.
Business and life are full of surprises, and things beyond our control change all the time. It’s not a matter of “if,” it’s a matter of “when” things are going to change.
The people that are going to win are the ones that can make tough decisions with limited information and a high level of risk and minimize losses. (At least, that’s what I’m telling myself.)
Three years ago, I would have prolonged the project and tried to recover, maybe spending a many more months working to push a boulder uphill.
I’m not going to lie: It would be cool to sell a site for $500,000.
But working on a big, aggressive project teaches you a lot and opens doors for you. I recently read the Scott Adams book called “How to Fail at Almost Everything and Still Win Big,” and one of the main strategies is to choose projects that will teach you something and expand your network.
That way even if the project fails, you’re better off for working on it. He frames it as a systems approach, not a goal oriented approach.
If we sell the site for $200,000 instead of $500,000, that’s still pretty good for a two and a half year old business with profit margins close to 90%. From a learning stand point, it’s been tremendous.
In just a few days, we’ll be starting the process of selling the site through Empire Flippers. Here are some of the many uncertainties:
- What will the site be valued at?
- Will the White Hat guest posts actually boost the value of the site? (The lack of PBN links should reduce the overall risk for the buyer.)
- What will the list price be on the Empire Flippers marketplace? (We could list it for less than the price that’s determined to make it more attractive to buyers.)
- How long will it take to sell?
What Do You Think?
Leave a comment below and tell me:
- If you think we’re making the right decision by selling the site for less than $500,000.
- Why or why not.