Lets start with what Due Diligence means – Due Diligence is a type of survey/research done on a particular business/website which is up for sale, and the buyer is unsure whether to trust its seller and the legitimate business being done.
There are already many big scams going on the web when small or big businesses are being sold, sometimes in ownership verification, and sometimes with fake stats etc. Due Diligence on websites should be made a necessity for every webmaster who is buying a website from someone who they are not familiar with.
The process includes checking the company records, the staff control system, the financial records and customer reports etc. which are the primary requirements for a buyer to know about the company and its internal stats. Experienced people has a Due Diligence Guide which actually teaches you how to be sure about everything before you buy a website and invest wisely.
Some of the best ways to check everything are -
- Ownership verification – There are several tools that can help you find the owner of a domain, although sometimes a few domains have hidden whois data. Once you see that the owner information is not available directly, it can be a sign of something fishy. One of the tools given in the guide can help you in searching for the exact information, which you can match with the person who is trying to sell you the website.
- History of the website – This includes many things like how the domain was used earlier, was the website running successfully in the past, and what guarantee does the seller give on maintenance of regular traffic, is the seller providing every stat about the traffic, sources of traffic, earnings made, source of earnings and guarantee that there would be no big change in earnings once the sale is done.
The financial side is the main one which every buyer would concentrate on, and so the proof of sales/earnings and confirmation of continuation of the earnings in future is a must for both the parties.
And if its a big website that you are planning to buy, there should be a confirmation whether the chief editors/staff members are staying or its just you who would be handling the website after the sale is finished.
Due Diligence is not just a simple check of the website stats, but it involves many things which finally makes sure that you are on a way of making a right decision.
Check out the Due Diligence guide at Experienced People.
As more and more “site flippers” get into the business of selling sites it becomes increasingly important to do your digging and poking into every claim made by the seller – from traffic to earnings to PR (yes, even page rank can be faked). The secret to making money is not in the creating of sites – it’s in the buying of sites that others have already made successes of. And this takes some savvy and expertise at due diligence.
Nice post on Due Diligence. I take most of the legal issues in my hand for my company, and when we buy any online business we check every part of it. So I am familiar with that term, and the guide you have given is also a useful one.
Nice piece of information on due diligence. Thanks.
Outstanding insight…. Did you consider that a lot of the financial transactions can be faked all the way through the system using off the books funds to generate on-line business?
intresting post, i will use the information i have gathered here to take over the world
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That’s a great checklist of checking a website before buying or selling it. The trademarks, the history of the website and even the verification of the website, domain etc. is always necessary. The proofing of payments when buying a website, is another thing to have in mind.