So you’ve decided to take the plunge and dive into the world of online business.
Buying an already established business is great way to hit the ground running and get into the marketplace as fast as possible. Buying an established business means time intensive tasks such as creating a business model, customer base, and supply chain have already been done. Once purchased, the business is all yours to fine-tune – and hopefully increase the customer base and profits.
Taking the first step when embarking on any task is usually the hardest part of the journey. Finding an ideal online business and buying one can be a bamboozling transaction if you haven’t done so before.
First, you have to know where to find one, then there is the process of vetting the business to ensure that it’s profitable, and finally sealing the deal and purchasing the business.
The process sounds easy enough, right? Find a business, see if it’s viable, and then purchase it. There are four different channels you can go through to find and buy an online business and in this post we will have a look at each channel in a bit finer detail.
Website Broker
A website broker is basically a real estate agent for online businesses. They will help you find, vet, and purchase your online business. They act as the middleman between the business and you, the purchaser. They do charge a fee, but for this fee will guide you through the whole process until the deal is done.
They get paid a commission, so it’s in their best interests to hold your hand until the deal is closed.
A website broker will vet the business and ensure it is legitimate and producing the figures that it displays to the public. They do this by using tools such as Alexa. Alexa is a market analytics tool used to quantify web traffic and global website ranking. The global rank, also known as the Alexa rank, can be used to monitor the popularity of a website and also compare the popularity of different websites. It’s a very handy tool to utilize when buying and running an online business.
Online Marketplaces
Online marketplaces where people trade in online businesses also abound. You can check out Exchange, Shopify’s marketplace to buy or sell businesses. There are many other marketplaces to browse around and some, such as Flippa, specialize in categories such as online gambling where many six-figure sites are on sale. Marketplaces generally allow you to search for businesses by category, price, revenue, age, and industry. Each listing contains information on the traffic and performance of the business, such as profit, revenue, inventory, sales, and profit margin. The listing will also have a detailed overview of the business and its social media presence.
If you do decide to purchase a business through an online marketplace, the vetting process is up to you. You’ll need to make sure the business is legit and producing the numbers shown on the listing. On Exchange, all the data comes from Shopify and cannot be altered by the seller, allowing buyers some peace of mind knowing that the figures are accurate and a correct representation of the business.
Online marketplaces are a great place to start and allow the purchaser flexible search options to narrow down the field and find an online business tailored to their needs.
Auction Sites
Auction sites are similar to online marketplaces except they allow you to place a bid on an online business. Auction sites give the buyer the opportunity to place a bid and possibly get a great price on an undervalued business. This can work to the advantage of the seller too, as it allows them to create more interest and the possibility of getting a better price.
Auction sites have come under scrutiny in the past, due to sellers using shilling techniques, such as ghost bids, to drive up the price of their website. Also, the vetting process has been accused of not being as thorough – and is at the buyer’s discretion to do this. If you’re not experienced in the vetting process it is advisable to avoid auction sites and stick with reputable online marketplaces or website brokers.
Direct Sale
You can always directly approach an online business that you wish to acquire by contacting them and making an offer – although this can be very hit and miss; most of the time miss! If a business is willing to sell, they will usually be listed on an online marketplace. But you never know and it can’t hurt to try. Your offer may be just the incentive the owner needs to sell! Always ensure to vet the business thoroughly before making an offer and go through the appropriate channels needed to make a legally binding contract for the sale.
Before buying an online business, you should also be aware of your involvement in the business and how many hours of work are required for you to maintain its current profits and traffic flow. Of course you will have to put more time and effort in if you want your traffic and profits to grow.
With more and more consumers looking for products and services online, it makes owning an online business an attractive notion. Just like a physical business, an online business should be analysed before making the purchase, using tools such as Alexa.
Out of the four buying channels available, online marketplaces are the most popular, using options like Shopify’s Exchange marketplace or Flippa. Auctions are riskier, although you may be able to jag the deal of a century if you know how to properly vet the company using the tools available. Direct sales are harder to find, although money talks and serious offers may just get the attention of the owner and prompt them to sell. A website broker will aid in the finding, vetting and buying of a business but will take a commission upon sale.
An online business can be a great investment and project but always remember to do as much research as possible before closing the deal.