18 Nov

The One Thing Private Investors Get Wrong During Their Due Diligence

Short of pure luck, market forces ensure that uninformed investors don’t last long. However, the market also punishes intelligent and savvy investors that make certain mistakes. Many private investors are taking big hits to their ROI because of one critical mistake during the due diligence phase of an investment relationship.

You may fully investigate the financials of a target company. You can fully vet the management team. You can even examine the marketing plan. You carefully study hundreds of details, but often you fail to properly study the website of the target company—and this mistake often ends up costing investors hundreds of millions of dollars each year.  

Why the Performance of the Company Website Must Be On Your Due Diligence Checklist

Websites are no longer just digital business cards or brochures. Websites are an essential business tool. Today virtually every commercial transaction begins online. People don’t even order pizza without first going online.

Even if your target company is a brick and mortar operation, and not a web based business, a significant amount of its reach and revenues will be driven by the performance of the website.

If the company is in the SaaS, ecommerce, or any other web based business space, the actual performance of the website is mission critical.

If you fail to understand how a target company’s website is actually performing you are setting yourself up for an enormous financial disappointment. A poor performing website will not generate the right type of traffic, will not convert site visitors into paying customers, and will slowly bleed a company dry…costing you the ROI you deserve.

What Private Investors Get Wrong About Corporate Websites

Most private investors do look at the website of their targets. However, they are not looking at the right KPIs. Instead, they usually only examine:

  1. The “look” of the website
  2. The amount of traffic to the website
  3. How the copy on the homepage reads

This approach fails to get at the parts of a website that actually drive revenues. Any semi-competent businessperson can put up a website that doesn’t look like a dumpster fire and has a coherent homepage. They can even use different techniques to drive a steady flow of traffic to the site.

However, a corporate website that meets these basic requirements may not be optimized for organic traffic, it may not convert browsers into buyers, and it may grossly underperform when it comes to actually making money.

Understanding the KPIs of a Successful Website

What does a successful corporate website look like? When evaluating a target company’s website during your due diligence phase you should ask the following nine questions that relate to the KPIs of a successful website:

  1. Has the website been professionally designed for conversion?
  2. Has the user experience (UX) been professionally optimized?
  3. What is the capacity of the website? Can it handle the load of traffic a viral marketing campaign will deliver?
  4. How fast does the website load?
  5. Is the website responsive?
  6. Is the website search engine optimized (SEO)?
  7. Does the written content engage readers and motivate them to take action?
  8. What is the website bounce rate?
  9. How well does the website move visitors into the sales funnel?

A website has to do more than just “look” good. It needs to be designed with an understanding of the psychology of the buyer, with UX best practices, and it needs to work without any bugs every single time.

Companies that are maximizing their web revenues have websites with:

  • High conversion rates
  • Low bounce rates
  • High amounts of organic traffic from web searches
  • Fast load times
  • 100% up time

Your Options When a Target Company Website Doesn’t Measure Up

Once you start being more rigorous in your evaluation of target company websites you will find that many don’t make the cut. That leaves you with two choices. You can pass on the investment opportunity or you can help point the company in the right direction.

If the other fundamentals of the business are good, you could be losing out on significant profits if you simply pass on the company. While it is not a good investment strategy to throw good money at a company you now believe will underperform, you could use your influence to show the company their biggest weakness and make correcting that weakness a condition of your investment.

A good management team will jump at the opportunity to secure an investment from someone so astute and interested in their business to have evaluated their website so deeply. You will not only be seen as a great resource, but you will have improved the company’s viability and increased your potential ROI.

Why You Need a Web Design and Development Firm as a Strategic Partner

The problem with adding a vigorous website analysis to your due diligence checklist is that it creates one more thing that takes up your time. You have to figure out how to conduct the analysis and you have to ensure that the target company’s management team doesn’t screw up a second time with the website.

The best way to save yourself time and to protect the value of your investment is to find a reputable web design and development firm to be your strategic partner.

Your strategic partner can handle the website evaluations. They speak the lingo and have the in-house expertise to recognize the difference between a prize winner and a pig with some lipstick.

Even more importantly, when target companies need new websites you can steer them to your strategic partner. You know that your strategic partner will do an excellent job and will deliver on time. The companies you invest in benefit from working with the best web design and development minds in the business. Everyone benefits because when the company has sound fundamentals and a powerful, well-designed website, they are much more likely to make significant revenues much faster than other companies.

How Levi Marketing Works With Investors

The team at Levi Marketing creates websites are 100% custom designed and developed. We use clean code so our websites are bug free and will work as designed whether it’s three weeks from now or even three years from now. We design websites built to scale as your business scales. You don’t have to worry about outgrowing one of our websites.

We have over eleven years of industry experience and have been honored with several industry awards for the quality of our work. We have more than 40 designers and developers on our team. In addition to our team of designers and developers, we routinely work with some of the best writers, SEO experts, hosting and security experts in the industry. There is no job that is too big or too complicated for our team.

We start every job the same way. We work to learn as much about your business, your pain points, your needs, and your target market as possible. We have an organized, well-defined intake process that helps us get the information we need to deliver the perfect website to you on time.

We work hard to deliver a pain free experience from start to finish.

We are proud of our work and stand behind every website we create. Come check out our website to learn more about us and to see our work and the testimonials from our clients.

Contact us today to see what we can do for your business. We promise you will be glad you did!