One of the main questions I get is, How do I get to break even with my company or the company I want to start? First off this is an amazing question and probably one of the first questions you should be able to answer before you start a company. Here is the main process I use to find if I will be able to break even on a venture. Normally, if I am not able to break even within the first year I will not even attempt my idea. I could try to explain excel charts/graphs and other things that I make, but at the end of the day it can easily be simplified.
The most recent person I talked to about buying a company wanted to buy a website for 12,000 dollars, with the hopes of paying for the site in the first three years and then turning a profit! This was obviously the hopes and dreams aspect. So the first question I proposed had to deal with profitability and page views since the site was indeed a blog.
Site Stats
-200,000 page views per month
-400 per month profit after domain hosting etc
The first plan of action was to see if the site could become more profitable. I know that you should be able to make $2-15 dollars per CPM (thousand impressions) Therefore the site should bring in 400-3,000 per month. The site was bringing in 400 in profit so it was probably bringing in 500 all together.
Upsides of the site
-strong user base (rss)
-Has been around over 6 months
-Other places ads can be placed without damaging the content (extra 100-300 per month)
I told my friend that buying the site would probably be a good choice, and luckily it turned out to be. Within the first month of running Myads on myspace, month user base increased by 40% with only 1,000 investment. Users were captured using the footerad rss subscription method. Monthly profitability is around 650 right now and should stay constant with the help of additional ads. The site will be paid for in a little less than two years and a steady flow of 7,500 a year is not bad.
The company was bought by taking out a prosper loan for 12,000 at 9% which is 381 dollars per month.
