You have spent all that money on design, graphics and lots of exciting content - but what is your web site really worth?

Friends Reunited has recently been valued at about £25 million, while the owners of lastminute.com moved into the black for the first time in November despite being paper millionaires.

So what is your web site worth and can it be regarded as a tangible asset when valuing your business?

As more money is poured into web sites, owners are insisting on adding the value of the site to their list of assets. Lenders, however, are not keen to advance money against digital assets that have no tangible value.

It is a familiar story that web entrepreneurs with no money left need major expenditure to keep a business on track.

They are then faced with another set of problems because, as they have no idea of the actual worth of their internet business, they don't know how much to sell it for.

There is no easy answer. Obviously the value of a web site may come down to what the buyer is willing to pay and what the seller is willing to take but I believe that buyers and sellers need some kind of official guide to help them determine the valuable/worthless aspects of a web site.

If you want to buy a web site then a DIY valuation may be adequate but the average buyer or lender will need a far more substantial valuation.

The first thing to remember is although every internet business is unique it is not impossible to value.

Like any business, it will have standard income and balance sheet figures that need to be assessed.

Unlike a "bricks and mortar" business, however, an internet business can have additional value to a purchaser. It may not have any income at all but its traffic levels could make it worth a great deal of money to an interested party, particularly if the traffic all comes from a single user group.

Other issues to consider include affiliated networks, the value of a customer database, lists of visitors, "cookies" in place on visitors' computers and opt-in email lists.

Advertising revenue will add to a web site's value, as will search engine rankings and plenty of site traffic.

The value of site content must be assessed and so must any unique processes. Are there any patents that relate to the web site? Do people come back time and time again? What about the number of times visitors actually make a purchase. If this figure is high, then the site is obviously worth considerably more than if only a few visitors are convinced to buy.

On the down side, all web sites have expenses of some kind. It is vital all expenses are listed and checked carefully before any kind of assessment can be made.

The sort of things that need to be considered are hosting fees, maintenance and technical support, streaming media fees, web site optimisation and PR costs, It is also important to include a sensible budget for regular redesign works. Unless a site is kept looking fresh and interesting, its visitor rate and value will drop dramatically.

Before parting with money for any web-based business, you need to determine what the return is going to be and if the acquisition is going to be a worthwhile investment in the long run.

For information on internet business valuation, see www.dotappraiser.com
www.websitebroker.com
www.aandco.com/valuation.html