To Buy & Develop or Not... | DomainInvesting.com
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To Buy & Develop or Not…

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I have an opportunity to buy a great domain name that is the name of an industry and profession (not Internet-services related). I am around these types of people often, and there is an abundance of them in my area, as well as throughout the country. Many of them advertise on a variety of websites, including their own, but there is no industry leader.

The domain name is expensive, and the price I pay would probably be considered more of an “end user” price. However, I would not be overpaying by so much that I couldn’t recoup the investment should my business plan not go as well as I believe it can. In other words, it might sell for a loss if I had to liquidate it.

The problem is that I have several projects on my plate right now (including the blog), and I am not sure the smartest move would be to outlay a handsome sum of cash to acquire the domain name and create another project for myself. There are competing websites that do what I would like to do, showing that there’s a market – but also showing that there’s competition.

Decisions, decisions… What would you do?


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (20)

    Troy

    If you have multiple projects then focus on and finish those. Too many people have killed their businesses by overreaching. If it was a deal that you could not pass up then it is one thing but you feel that you are not getting a great deal, just a fair price.

    There will always be domains at fair prices on the market. Focus on what you have until the development is done, then start looking for the other domains. The minute that we “have to” have anything is the moment that we make a bad business decsion. Who knows, you might be able to buy it for 50% of the asking price a year from now anyway.

    October 12th, 2009 at 5:28 pm

    Steve M

    In this case, my friend, fewer is better … and less really is more.

    Much more.

    Just say no.

    October 12th, 2009 at 6:37 pm

    Bill E

    I agree with Troy. The price isn’t right and it’ll take focus away from other projects.

    You’re description also leads me to believe you have an attachment to the domain due to your familiarity with the topic and people involved in it. Is it possible this could be clouding your judgment?

    October 12th, 2009 at 6:56 pm

    Frank Michlick (Domain Name News)

    Instead of an answer, I’ll give you more questions 😉

    How familiar are you with the industry in question? Is there someone you could partner with and would that make things easier?

    /FM

    October 12th, 2009 at 7:29 pm

      Elliot

      @ Frank

      It’s a service industry and once a site is built, I could generate awareness simply by doing what I do every day. If I lived in a small town somewhere, it wouldn’t be a good idea for me, but living in New York makes it much easier to spread the word.

      October 12th, 2009 at 7:31 pm

    Josh

    Do it, Im just curious now what the name is lol

    October 12th, 2009 at 7:40 pm

    Sammy Ashouri

    If you believe you can buy and resell, go for it… assuming extra cash on hand. Holding a couple of domains like these and just starting getting to them on my “to-do list”… while waiting, I’ve received reasonable offers,

    October 12th, 2009 at 8:01 pm

    Frank Michlick (Domain Name News)

    If it’s a service industry the questions I was asking are even more relevant. I.e. will you be providing the services yoruself, will you build a directory of providers (sales people needed!) etc.

    So probably the real questions are:

    1) How long will it take you to develop it? (estimate the time and then double it 😉 )
    2) How muich of your time will it take for you to run it?
    3) How quickly will it pay off the purchase?
    4) How much money is it going to make you?

    If waiting to develop or developing slowly is an option after answering those questions. Go for it. Start developing it and blog about the process while you do so, to get more people interested. Maybe you’ll even get an offer to sell it during that time like Sammy suggests.

    October 12th, 2009 at 8:08 pm

    Elliot

    @ Frank

    Very good questions. It won’t take me time to develop per se, as I would have someone build the directory for me (answers 2 questions!). Running it should take less than an hour per week after launch, and getting publicity will take a fair amount of time, but it will be done while doing something else that I do every day. My iow-end projections put me at earning all of the money back in 2 years, but if it’s as useful as I think it could be, that time will be cut in half. This doesn’t even consider the value of the name, which will increase with development.

    October 12th, 2009 at 8:11 pm

    Lance

    Does the subject matter of the domain name interest you? A wise man once said:

    “Had I really known what I was getting in to at the time, I probably would have flipped TropicalBirds.com instead of developing it. Truthfully, birds aren’t that interesting to me. I enjoy learning about a variety of things, but I am not a true birder. It’s a struggle to get myself to build pages and add content to the site, but I am doing it because I know that will increase the value (as a result of traffic and revenue). So take it from me, focus on developing on a domain name that is in a field of interest. You will be thanful for it down the road.”

    October 12th, 2009 at 9:51 pm

    Elliot

    @ Lance

    LOL… yes this one is of interest to me (and my wife) – so double bonus :)

    October 12th, 2009 at 9:52 pm

    jeff

    elliot

    i know your focus is obviously geo .com sites, you continue to build traffic up and gaining private advertisers. you sold a lot of extra inventory a couple weeks back and realized probably having a smaller portfolio during these times is the best thing

    if the domain name has high interest and its a generic killer name, go for it if you can make it work but above end user price?? you got a price range you can give out if you care to share? is it 5k, or 50k, etc?

    go with what your heart tells you and passions on the topic. thats my number one advice.

    not to be critical but you have a few geo .com names, want to develope more things and mentioned an eccomerce site in the future. now this.. only so many hours in the day and its obvious-you work the 70 hour weeks elliot. if you feel good on cash flow from your sites now and next few months-thats a good indicator what you should do i would say.

    would you pay cash on this name or would you consider to take a loan out? remember you friends at the peak of .com run, people paying 8 years revenue out, taking out equity lines of credit, these domain loan companies and after generic .com names.. then half the value goes down in the name, huge downfall in ppc parking, interest rates on the loan.. i know you dont like doing loans and thats a wise thing but taking that your chatting on development and not ppc, this could be a different story and something to consider imo.

    October 12th, 2009 at 10:08 pm

    Pedro

    Do it!

    October 12th, 2009 at 10:26 pm

    Gunner Steele

    I’m more interested in your business plan – specifically your monetization plan.

    Are there existing affiliate programs for this service?

    I think that the business model for selling advertising space on a site or domain is becoming more of a losing proposition. It is labor intensive, and doesn’t maximize profit potential.

    The value that you should give to your site visitors is to understand what they’re looking for, and give it to them. The value that you should give your business partners (affiliate partners) is qualified leads, referrals, or outright sales.

    For the most part, I think that the direct advertiser model sells everyone short in the transaction. The site owner is not maximizing the value of their traffic, and the advertiser rarely is able to optimize and maximize their ad spend.

    There are areas where direct advertiser models work well for some sites and industries, but I think that everyone involved is leaving either money, value, or both on the table.

    I say to go ahead and buy-and-develop. It is tough to juggle so many development projects – but it is possible – especially with very detailed development plans and a skilled developer shop.

    I’ve moved from domainer to developer and am currently managing the development of at least 50 sites (full sites, not minis) a month – all outsourced.

    It’s difficult times like these when fortunes are made.

    Double down.

    October 13th, 2009 at 10:30 am

      Elliot

      @ Gunner

      I won’t be selling advertising… it will be directory listings.

      October 13th, 2009 at 10:32 am

    Gunner Steele

    I do like the directory-listing model, especially for category-killler domains.

    Recurring revenue, upsell potential with premium placement, and you can place your own CPA links…

    Go for it!

    GS

    October 13th, 2009 at 10:45 am

    mark

    My thought is that you have already made your decision.

    If it was that great of an opportunity I think we would be reading your announcment that you have already acquired the domain name.

    October 13th, 2009 at 12:34 pm

      Elliot

      @ Mark

      Pretty much did after the last day thinking about it and 99% ready to do it based on things I’ve posted here. I am going to keep this one close to the chest for a while until it’s launched.

      I asked a few good friends – two from NYC and a couple others from outside, and not surprisingly the NY guys said I should absolutely do it, and the others said they didn’t think it had much value. Eventually when i disclose it, I will give more rationale for it, and hopefully be able to provide numbers.

      October 13th, 2009 at 12:43 pm

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