I lost all of my website income shortly after I left my job. Now, if you’re anything like…anyone I bet you’ve dreamed of owning a nearly 100% passive income business. One that requires little input from you and keeps rolling in the cash every single day. I’m here to say outright, that unfortunately, this is a bit of a pipe dream, at least with such ease. What I thought I had set up was too good to be true.
I used to work in a factory, doing night shifts as a maintenance electrician. This was tough on my body & mind, not to mention fairly boring. I was the youngest guy at the factory as a tradesman as well, which garnered little respect for my efforts, and crushed my spirit a bit. My original plan was to grind it out, by a bunch of rental properties, then hang my hat up and work on fixing up and optimizing those. Pretty solid, classic plan. My lack of patience got the better of me and the entrepreneurial bug had it’s hooks in me.
Patience is a Virtue
In the past, I had sold worms, sold SD Cards, run an online smoke shop and had a onesie store. These were all solid little businesses, while they didn’t make me enough to be financially independent, they were fun projects that taught me a fair amount about running businesses. Then one day, I stumbled across websites as ‘investments'(they aren’t). Intrigued, I didn’t jump on the bandwagon straight away, I kept learning and searching for the right deal, or what I thought was anyway.
I eventually found a seller on some backwater broker website, it was only selling for 4 times monthly earnings(immediate red flag). I figured I had little to lose and after some negotiation, I bought one of these sites. It was in the insurance niche, with some scrappy articles that were legible, but kind of said…nothing, if you know what I mean. It used Adsense as an income source and had some crazy high ctr(click through rates). The seller assured me that this was because of the type of niche the site was in. I now know this was another red flag.
I purchased the site, set up my Adsense account and the income started rolling in. This had me feeling a bit more comfortable. I bought this site for about $2400 bucks, and the income was around $15/day or $450/month. This wasn’t quite the 4-5x monthly income promised, but the seller figured this was because I was from a smaller country.
Things were going well, and this added easy income let the greed creep in a little. I was pulling in a fair whack each week from my job, so I started dipping into my income and line of credit(leveraged against my rentals). I used this income and small loan increments to purchase websites as they became available. Not all of these sites were created equal and some cost more than others.
I bought a bundle of websites over the course of a couple of months. All up I spent about 30k and acquired 11 websites from the same seller. Around 15k of this was borrowed by the time I was done purchasing, from memory. The gross income I was receiving monthly came to around 3-4k. Not a shameful amount by most people’s standard.
One of the income statements from AdSense. Dunno how much I can show you, so most of it’s blanked.
After I’d built(bought) this portfolio up, I wanted to optimize it. So, I hired a team of Russian writers to come up with article ideas, then write them and post them, along with an image. They charged about $25/week per website, so with this, I was really only profiting 2-3k/month. I also hired somebody to help with ad placements. Here’s the odd thing, as soon as we changed them, the ad income stopped, so we quickly changed the ad placements back.(Red Flag)
These changes did very little for the site. I didn’t really know much about SEO, or how to read analytics at the time. But a lot of the traffic was coming from a weird search engine called Search.url. This was another red flag really. The seller reassured me this was a ‘tracking-free’ search engine that had a growing user base outside of the US. It went down once or twice which resulted in the income nearly dropping off entirely. Mmm, red flag.
Despite all the minor troubles I had, the added income gave me a surge of confidence. I got into an argument with my boss one day and wrote my resignation letter the same day. I woke up one morning to find an email from Google informing me that my AdSense account was banned. Crap.
During this, I also bought a website that was independent of AdSense. I won’t reveal the URL, but this is a site I still have a few years later. It still pulls in a couple of hundred a month, though it’s slowly dying and it isn’t worth revitalizing.(2019 update: I no longer have this site.)
I never did get my AdSense account back.
Even to this day I don’t have an AdSense account. This has left me concerned with pursuing things like YouTube and building out other websites which may rely on such revenue streams to get started.
Google never justify their reasons for banning your account. I figured it was because the site was a part of a click ring or botting, basically people or machines go through and periodically click the ads on your site. More than likely, it was this. Could have been the Russians using unlicensed images. I’ll never know for sure and have since put it behind me.
Point of the story is, if it seems too good to be true, it probably is. It was an expensive lesson, I could have used the cash I put into these websites to purchase another property, or to start a proper business, or as emergency savings to lean on after leaving my job. Instead of being left with feelings of desperation with no major income.
Fortunately, I had my trade as an electrician and I was able to pick up some sub-contracting and local residential work to get back on my feet. Without my blue-collar roots, I may have been totally screwed.
If I had my time again with the ol’ Adsense websites, I would have just built them from scratch. Building from the ground up gives you the opportunity to learn and grow as you go. I’d also look at building on one income stream at a time, then adding other streams to the core site later. Ads should never really be counted on as a reliable source of income for anybody. Unless you run an ad or marketing agency, I suppose
I made the same mistake a couple more times though. Once with my food business and again with another website I bought(and later sold). Buying a business a great way to get a head start, with a ready-built customer base and income stream. But, if you know little about the industry that you’re buying into, then your inexperience can be a massive detriment to your progress. Customers pick up on this and it can result in some fairly negative effects.
Nowadays, websites go for about 20-30x, this is a huge amount of capital to risk on something that you have no idea on how works. Of course, you can do full research and due diligence, and you may not have a similar experience. You want to follow the 5 key elements of business, “Need, Entry, Control, Scale and Time”(post about this at a later time). You may have to sacrifice one or two on lower end websites. Maybe this is OK for your needs or you just want to get your feet wet. But for any business capable of creating generational wealth, you’ll need all five. As always, exercise caution and a margin of safety in anything you do.
I at least still have the membership site I purchased during this period, the PayPal account swells and I empty it every few months. Nothing to write home about but it adds a little to the family coffers every now and then, though it will die over time. Probably give it another year or two.(2019 update: It dried up.)
Have you ever had any similar experiences? Has this made you think twice about buying that website from Flippa? Or will you still risk some capital on a positively risky venture? Let’s discuss in the comments below.