Global pandemics like Coronavirus cause entire countries to temporarily close down businesses which essentially brings their economy to a halt. Basic economics tells us this is not a good thing because companies can’t make money when they’re closed and that leads to citizens losing their job. Economic downturns can effect most industries that aren’t considered essential, such as domaining. With COVID-19 still ravishing some countries, people are suddenly paying a lot more attention to their finances. It’s important to have a good handle on where you stand financially during uncertain times. This is especially true for domain name investors. Investors need to understand what’s ahead and consider opportunities that may present themselves.
Extending Your Cash Flow
There are two types of investors in the world: those who don’t have cash and those who do. If you find yourself in the first category, it’s time to put the pencil to the paper to make a plan. Your goal is to extend your cash as long as possible so you can make it to the other side of the downturn.
Make A Cash Forecast – Knowing exactly where you stand is key. Start by looking at your domain portfolio and when your names expire. Create a forecast for how much you need to spend on renewals each month. Multiply the number of domains that expire each month by the renewal fee and that will help you forecast your renewal costs for the next 12 months. This forecast will represent the bare minimum you’ll need to spend to maintain your portfolio to prevent good domains from expiring. Keep in mind, generating sales can help offset some of those renewal costs, but forecasting sales is much harder than renewal costs. Aftermarket domain sales can move in various directions during a recession. People who get laid off from work (or have more spare time on their hands) may choose to start an online business which would require them to purchase a domain. At the same time, other businesses will put off buying a domain until the future is more certain.
Optimize For Sales – Investors can get lazy when times are good. With the current economic state in several countries, now is a good time to make sure your domain sales funnel is optimized properly. Make sure your domains are getting maximum exposure. Make sure all of your domains are pointing to proper domain sales landing pages and are all listed in the major marketplaces. Finally, take a look through offers you’ve declined over the past 6-12 months. If you need cash, consider reaching back out to the interested buyers to see if you can negotiate a deal.
Look For Good Buying Opportunities
If you’ve got the spare cash and are looking for opportunities, it’s time to keep a very close eye on the market. People tend to wait on lowering their asking prices until they have to. Like real estate markets, domain values might take a while to adjust to a recession. If a recession lasts a long time, some owners will eventually lower their expectations as they try to generate cash to pay for renewals or other bills. Consider browsing through old inquiries you made for domains throughout the past year which the owner said they were not interested in selling (or their asking price was more than you were willing to pay). Send them another email to see if they are interested now. Don’t forget to keep a close eye on expired domains. Expired domain auction prices will remain high until domain investors are hurting for cash. All it takes is one or two major buyers to stop bidding in order for auction prices to fall.
Keep A Clear Head
People often make poor decisions when they’re under duress. By taking the time right now to forecast your future costs, you’ll be able to think clearly anytime you receive a sales inquiry or negotiate to buy a domain name from someone else.
It’s hard to say if COVID-19 numbers will pickup again come fall time, but some states in the US have already started seeing another uptick in cases and if it continues, businesses might need to close again. It’s always best to hope for the best, but prepare for the worst.