BusinessHABOnline Business Purchasing Tips: To own and operate your own online business doesn’t mean you have to necessarily build a business from scratch.
Many entrepreneurs do because they have the time, skills and energy to, but another option exists.
If you’re interested in operating your own online business but want to fast forward through the formative years of generating traffic, profit and customers then consider purchasing an online business for sale.
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Online Business Purchasing Tips
1.Starting a New Online Business
What buying an online business for sale essentially comes down to is mitigating the time, monetary and knowledge investment required to build a business from scratch whilst still gaining the advantages of actually owning an online business.
Buying a business helps entrepreneurs skip past the beginning stages of building a startup like the long hours, restricted cash flow, inventory sourcing, system establishment, traffic and customer generation, etc. and takes them straight to the advantageous aspects of operating a business.
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Online Business Purchasing Tips
When buying an online business, entrepreneurs have the ability to buy into a company that’s already proven to be profitable and the products are already in demand which means it’s a valuable asset to gain. Entrepreneurs can also buy into existing businesses to gain more market share in an industry they already exist in, making them a more fierce competitor and giving them a greater opportunity to dominate.
Online Business Purchasing Tips
If buying an online business for sale sounds like a more attractive option to you than starting a business from scratch, it’s important to consider all the disadvantages and advantages that come with it.
Even though it might sound like an easier and faster route to success than building a completely new brand from scratch, there can still be risks involved.
The upfront investment when buying an online business for sale is generally much higher than simply building a business from scratch.
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Online Business Purchasing Tips
You may have to take over processes and systems that are inefficient or outdated, you may take on employees and there could be potential liabilities and legal risks imposed on the business as well.
For these reasons, doing your own due diligence is of the utmost importance if you’re interested in purchasing an online business for sale.
Online Business Purchasing Tips
2.Why an Online Business is a Good Investment
When buying an online business for sale, you’re putting yourself in the position to invest in online property in a similar way as if you were to invest in physical property like real estate.
Online businesses are like a digital version of physical property, and just like real estate values can grow and prosper over time, so can online business values. The “space” digital assets — like online businesses — take up online is valuable and buying digital property now can lead to a return on investment later.
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Online Business Purchasing Tips
Besides owning valuable digital property, there are other reasons why buying an online business for sale can be a good investment: Online businesses can generate passive income, meaning that for a low hourly input they can generate a high monetary output. They can also be run in addition to working a typical 9-5 job, meaning that the owner and operator of the business can earn additional income on top of their normal salary. Buying an online business for sale can be relatively easy (especially if you shop around on some of the marketplaces we list below) and exiting the online business at a later date can be just as routine as well.
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Online Business Purchasing Tips
Buying an online business for sale can be as hands-on or hands-off as you want the process to be, but either way, purchasing an online business for sale can be a valuable asset to gain that provides you with a return on investment which can help you earn income passively while you work your typical day job, and you don’t have to dedicate your whole life to it as you can put the business back up for sale again whenever you’re ready to move on.
Online Business Purchasing Tips
3. Pros & Cons of Buying an Online Business for Sale
Buying an online business for sale and starting a business from scratch both have their own lists of pros and cons, so it’s important to remember that neither is inherently better than the other. Both have advantages and both have disadvantages, it’s just important to know them upfront before you decide to commit to either one.
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Online Business Purchasing Tips
THE ADVANTAGES OF BUYING AN ONLINE BUSINESS
- The Legwork is Done For You: Skip past the late nights and hours and hours required to start a business from scratch; someone else has done it all for you.
- The Business is Already Up & Running: No need to create a launch strategy and execute launch campaigns, the business is already past that stage.
- Products Have Been Sourced: No need to search high and low for a reputable dropshipping supplier, manufacturing supplier, private label supplier or wholesale supplier, the online business for sale already has a sourcing system in place.
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Online Business Purchasing Tips
- Systems Have Been Put Into Place: Speaking of having systems put into place, that’s one of the main advantages of buying an online business for sale. Systems like sourcing from suppliers, shipping and fulfillment, logistics, return policies, etc. have already been established.
- Customer Base Established: No need to work on generating initial traffic to the online business, there’s already a customer base purchasing from the store.
Online Business Purchasing Tips
- Can Go Straight to Growing & Expanding the Business: Since all the beginning stages of setting up an online store are taken care of, you can go straight to growing and expanding the business.
- Investment Opportunity: Online businesses can be a valuable digital asset that provides a return on investment.
- Taking Over Employees: Purchasing an online business for sale can also include employees of the business who know how the business’ systems operate and what they need to do to fulfill their job roles
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Online Business Purchasing Tips
- Investing & Financing: It’s often easier for entrepreneurs to get financing to buy an online business for sale, or to gain investors in the business, as the business has a proven history of growth and success.
- Rights to Assets: Buying an online business for sale can also give you legal rights to assets like patents and copyrights that the business may own.
Online Business Purchasing Tips
THE DISADVANTAGES OF BUYING AN ONLINE BUSINESS
- Risk Tolerance: Depending on your risk tolerance, buying an online business for sale may or may not be the right decision for you.
- Upfront Investment: There’s usually a high initial upfront cost when acquiring an online business for sale, as opposed to building one from scratch and investing in it over a longer period of time.
- Bound by Existing Systems: Changing existing systems in place can be difficult or impossible, depending on the online business for sale, so you might be bound to operate the online business with its existing systems whether they’re the most efficient process or not.
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Online Business Purchasing Tips
- Searching for the Right Business: Finding the right online business for sale can be a very time-consuming process and can take lots of searching, investigating, and back & forth between you and the seller.
- Withheld Information: There is potential for the seller to withhold information and data about the business until you purchase it, so it’s essential to conduct thorough due diligence and ensure you have legal protection in the event that this happens.
Online Business Purchasing Tips
- Evaluating the Business: Since it’s an online business for sale, it can be difficult to evaluate the business as you can’t see anything in person.
- Lack of Control: You don’t have full control over the business’ development as the developmental choices have already been decided when the business was originally being created.
- Commitment to the Business: Although acquiring an online business for sale can be a valuable asset, it could also mean that you get stuck with the business and all its assets and capital whether you like it or not if the business doesn’t turn out to be everything you thought it would.
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Online Business Purchasing Tips
4.Who Should Buy an Online Business for Sale
Buying an online business for sale might be a great option for some entrepreneurs, and not the best option for others. Just like it takes a certain kind of entrepreneur to build a business from scratch and work through the long hours of hustling and grinding through the business creation process, the same can be said for an entrepreneur who’s ready to step into a thriving and profitable online business and is capable of scaling its growth.
Online Business Purchasing Tips
Not every entrepreneur can do that, but these are the kind of entrepreneurs it might be right for:
- An entrepreneur who’s maybe not great at starting & building online businesses but who has the capabilities to scale and grow one
- An entrepreneur who’s not interested in putting in the hustle & elbow grease of getting a new business up and running and wants to skip past the beginning stages
Online Business Purchasing Tips
- An entrepreneur who’s good at evaluating business’ strengths & weaknesses and knows how to optimize them for maximum efficacy
- An entrepreneur who has the capital & energy to invest in acquiring & running an established business
- An entrepreneur who’s interested in developing businesses and growing them to greater potential
Online Business Purchasing Tips
- An entrepreneur who has experience building, running & growing online businesses and knows what it takes to keep them afloat
- An entrepreneur looking to gain the learning experience of running & growing a business
- An entrepreneur looking for an investment opportunity.
Online Business Purchasing Tips
- An entrepreneur with a high risk tolerance looking for a project and challenge to work on
- An entrepreneur looking to generate passive income while they work their day job
- An entrepreneur looking to make an investment in valuable virtual property that will provide them with a return on investment.
Online Business Purchasing Tips
5. Criteria for Finding an Online Business
If buying an online business for sale sounds like a good option for you and your entrepreneurial goals, it’s important to first establish criteria before you start searching for an online business for sale so you know what you’re actually looking for.
It can be easy to get caught up in all the online business listings you see on buying and selling marketplaces, so by establishing certain criteria before you start your search, you can prevent yourself from getting too caught up in what’s on the market and remember what your goals are.
Online Business Purchasing Tips
The criteria you set for yourself when looking for an online business for sale could be:
- Types of Products: You might only want to acquire a business that sells a certain kind of product.
- Certain Niche: You may only want to look for online businesses for sale in a certain niche that you’re familiar with.
- Specific Industry: You could also narrow down your search by sticking to online businesses for sale within a certain industry you have experience in.
Online Business Purchasing Tips
- Size of Business: You may only be comfortable acquiring an online business for sale that has a certain number of employees, distribution locations, amount of sales, etc.
- Revenue Earned: You may only want to acquire an online business for sale that meets a certain yearly amount of revenue earned.
Online Business Purchasing Tips
- Profit Earned: The amount of profit the online business for sale earns may be one of your main focuses.
- Size of Customer Base: You may only be interested in an online business for sale that services a certain size of customer base.
- Business Model: Consider narrowing down online businesses for sale based on how they source their inventory (such as by manufacturing, wholesaling, dropshipping, etc)
- Ecommerce Platform: You may only be interested in acquiring an online business that operates on a certain ecommerce platform (like Shopify or Shopify Plus, for example)
Online Business Purchasing Tips
6. Where to Buy & Sell an Online Business
While there are several websites you can go to buy or sell an online business, each one has certain qualities that impact the buying and selling process which makes it a slightly different experience.
Depending on how the website is set up, there may be different procedures by which you need to adhere to buy or sell an online business. These are some of the most common ways online businesses are sold online:
Online Business Purchasing Tips
- Marketplaces
- Buyers and sellers personally list their businesses for sale on marketplaces and the marketplaces exist to connect online business buyers and sellers. Some marketplaces just connect buyers and sellers and let them work out the payment terms on their own, while other marketplaces will help to facilitate the payment process and administrative switch over.
Online Business Purchasing Tips
- Each marketplace varies and is entirely dependant on the buyers and sellers that list their businesses on the platform. The success of each marketplace depends on the buyers’ and sellers’ credibility and that they provide honest information in their listings.
- Examples of marketplaces you can use to buy or sell online businesses: Shopify Exchange.
Online Business Purchasing Tips
- Buyers and sellers personally list their businesses for sale on marketplaces and the marketplaces exist to connect online business buyers and sellers. Some marketplaces just connect buyers and sellers and let them work out the payment terms on their own, while other marketplaces will help to facilitate the payment process and administrative switch over.
- Auction Sites
- Auction sites operate by allowing buyers to bid on each online business for sale.
- Example of auction sites you can go to bid for an online business for sale: Flippa.
Online Business Purchasing Tips
- Brokers
- Buying an online business for sale through a broker is a much more personal experience than purchasing through a marketplace or auction site, and it’s a much more individualized experience for the seller as well.
- Brokers often have a network of buyers and sellers they work with to pair the right matches together, and they also make a cut of the sale which is what drives them to help businesses find the right fit.
- Examples of online business brokers: Digital Exits & FE International.
Online Business Purchasing Tips
- Contacting Online Business Owners Directly
- You can also contact online business owners directly and ask if they’re interested or willing in putting their online business up for sale.
- If you choose this avenue, make sure to thoroughly conduct your research before inquiring with the business owner.
Online Business Purchasing Tips
- You want to know what a fair market price is, you need to be prepared to negotiate, you have to know when to walk away and you need to know what you’re buying into.
- As part of your research, use tools like Alexa, Ahrefs and SEMrush to get a more behind-the-scenes look into the health of the business.
Online Business Purchasing Tips
7. What to Look for in an Online Business
When looking at an online business for sale, it’s important for you to examine the listing carefully so you understand all the important information you need to know to determine whether it’s a good fit for you.
In addition, it’s important for you to closely examine each listing so that you understand whether it’s a viable asset to invest in and if it’s a reasonable chance you’ll get a return on your investment.
Online Business Purchasing Tips
These are the things you should pay attention to in each online business sales listing:
- Make sure it meets your criteria: First and foremost, check if the online business for sale meets the criteria you outlined in the step above. You created that criteria for a reason, so stick to it.
- Analyze the site’s traffic & backlink profile with Alexa, Ahrefs and SEMrush (learn more about how to use SEMrush and its features and functionalities in our SEMrush Review) to understand where the traffic is coming from as well as how much traffic it receives
Online Business Purchasing Tips
- Conduct a Whois Lookup to learn more about the owner of the website
- Ask yourself why the business is for sale and try to discover where there might be any discrepancies in information, some pitfalls or challenges the business might face or any opportunities for growth
- Know when the business was founded and how long it has been in business for
- Find out if there has been any legal action taken against the business and if so, why, as well as whether it was resolved or not.
Online Business Purchasing Tips
- Look into the revenue & profit numbers, the difference between the two, any recurring revenue it received and the various ways the store monetizes itself
- Get the full profile for overhead costs and monthly and yearly expenses
- Determine whether the asking price is listed at the fair market value
- Get a feel for the time investment that’s put into maintaining the online business.
Online Business Purchasing Tips
- Inquire into whether there’s any employees or contractors that work for the business
- Know everything that the sale of the online business includes such as the website, any employees, social media channels, supplier lists, an email newsletter, the domain rights, intellectual property rights for trademarks, patents, logos, etc.
Online Business Purchasing Tips
Conclusion
Now you’re prepared with the knowledge and information you need to know to find an online business for sale or to put your own online business for sale. Use the helpful information, resources, tips and marketplaces in this article to find a great business you can grow and scale over time.
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