As an entrepreneur, when starting a business, you have two choices:
You can begin from scratch. This means you will take your idea, research its marketability, create a business plan, possibly develop an MVP, set up a website, get on social media, build an email list, and then begin to market everywhere you can. All of this is a monumental undertaking, and it is not for the faint-of-heart.
Even if your new business does not involve new products or services (e.g., affiliate products/services, drop-shipping, etc.), you still have lots of work to do, if you are going to find customers and begin to make money.
Or you can find an existing online business for sale. The appeal, of course, is that you are not starting from ground zero. The business is already established and up and running. And, if you buy it, you have options – you can let it run as it does currently (basically a turnkey operation), or you can delve in, make improvements, and work to increase profits.
The key to succeeding with an online business purchase is three-fold:
- You must have an interest in the niche or the business operation – without interest you will lose motivation to make a “go” of it
- You must have the money to purchase it, of course
- The current owner must be fully transparent and even willing to train you a bit at first.
If this is the course you choose, you still have lots of work to do before you fork over that purchase money. After all, you have to make sure that the asking price is worth it. Hugely successful businesses can run into the hundreds of thousands of dollars. But you can also find a business for sale for a few thousand too – it will be smaller with far less profit but can still be worthwhile.
So What Types of Online Businesses are For Sale?
The short answer is all types. The following are the most common ones:
Affiliate Websites (Businesses): In essence, this business assumes receiving a commission for promoting the products or services of other companies on your platform (website). Affiliate marketing can be quite profitable, so long as the website owner continues to look for more affiliates, creates great content and other offerings, and knows how to market the website all over the place.
E-Commerce Businesses: E-commerce is all about selling products or services directly to buyers. Think Amazon here. The company mostly does not manufacture any goods, but it does sell products that have been listed by others. On a smaller scaler, a lot of e-commerce retailers order products at wholesale prices, and then resell them to consumers at a higher profit margin.
Dropshipping: This is much like the above business. However, you don’t carry any inventory. What you do is sell a product, get paid for it, and then order from the supplier, to be sent to the customer. Lean more about dropshipping with Aliexpress from our previous post.
Amazon FBA (Fulfilment by Amazon). In this case, the owner sets up an account with Amazon and creates a listing of products it sells. The product is sent to an Amazon fulfillment center. When customers order your products, Amazon packs and ships them. You pay a fee for this, of course, but you don’t have to deal with inventory management. If you buy such a business, you will also be buying its inventory.
Membership Websites: Charge for access to unique information and informational products. Interested consumers join, pay a subscription fee, and then get access to all of the resources available. For example, a fitness membership will offer online video training, information on health and diet, etc. Note: unless you are skilled in a specific area a membership site covers, you may not want to consider something like this.
There are also membership sites for discounts on products – sort of like buyers’ clubs. This can be lucrative, as long as the owner can continue to expand the product line and has the ability to purchase the products at extremely discounted rates.
The Pros of Buying an Online Business
- You are purchasing a business that is already up and running and established at least to some point. So you can forego the time and financial investment that comes when you start an one from scratch.
- The business already has some marketing strategies and plans currently in place and you can expand/improve on them to grow your profits.
- Plus, it already generates some profits that you can re-invest into expansion and break even relatively fast.
- You already have at least some customer base, an email list, and probably a presence on social media sites.
- Finally, you are in charge of your own work life and all important decisions that must be made. This is a huge motivator for many who buy online businesses, and it should be for you too!
Cons of Buying an Online Business
- You may need some niche experience that you do not currently have. In this case, you will have a learning curve, and that can impact your ability to hit the ground running.
- Buying and running an online business takes self-discipline. Check your true passion for this. Many who buy an online business underestimate the time commitment involved. If you think you are buying a “turnkey” operation, think again.
- The current customer base may be somewhat unreliable. Every business has a “churn” rate. If that rate is high, then you will have to spend time figuring out why and how you can reduce it. Often, it may be a matter of keeping ongoing relationships with customers.
- You will need to assume all of the marketing, accounting and other operational processes unless you are filling to hire some help.
Where to Find an Online Business for Sale?
This is not difficult at all, and there are a few options for finding a good online business for sales. First, check out typical marketplaces:
- Freemarket:This is a clearinghouse for entrepreneurs looking to buy, sell or trade online businesses. Buyers can check out a business and then place a bid.
- Flippa: An online marketplace to browse a bunch of websites for sale. This platform also provides support and buyer escrow.
- Shopify Exchange: Shopify is a huge e-commerce platform, with over 800,000 online businesses using its services for marketing, payments, etc. One of its sub-platforms is in the area of e-commerce shops (businesses) that are for sale.
- Bizbuysell: This site sells both online and brick and mortar businesses. These are higher-end in terms of pricing, though you may be able to find a few bargains.
- Websitebroker : This is a site that lists active websites as well as URLs for sale. Pricing ranges from as low as $97 up through over $100,000. The number of listings is quite small, but you may be able to find something of interest to purchase.
Second, try online brokers. Just Google “website brokers, and plenty of sites will pop up. Brokers exist to negotiate the pricing and other arrangements between buyers and sellers, and usually the fee is paid by the seller. The good thing about brokers is that they have to be mindful of their reputations and will usually do their own checking on both sellers and buyers before they agree to take on a sale or purchase.
Third, try auctions. Just like a regular auction, you will find huge listings of businesses for sale. There is an asking (or starting) price of course, but then you bid against other interested people. If you’ve participated in eBay auctions, you know the drill. Just be aware that some businesses owners will have shills who bid just to get the price higher. For example, if I had an online gardening tools business for sale, I might enlist a friend or two to engage in the bidding process, forcing legitimate buyers to go to a higher purchasing price.
What You Need to Consider as You Look to Buy
Nothing is absolute in buying a business and maintaining/growing it. But you can put the odds in your favor if you do your due diligence up front and lower your risk. So, how to value a small business for sale?
Is the business growing? Look at the history over the length of its existence. If you are going to be paying a lot for it, you may want to hire a forensic digital expert, to ensure that the numbers are correct.
Does the business have multiple sources of income? For example, if you buy an affiliate website, you know there are multiple streams. But if the business is focused on a single product or service, there is big risk unless you are willing to expand your offerings. Just think of products that came, hit it big, and then fizzled out. It can happen.
Where is the website traffic coming from? Again, you want to see it coming from search engines (SEO is pretty important here), from social media sites, and from shares and discussions on a blog, and from links from other sites. You need to ask the seller for these details and the analytics that he has run on that. If not, run your own analytics.
Are revenues at least consistent? If not, there has to be a reason. Search for it.
How is the current owner marketing the business? Of course, you can always expand on this. But if this online business for sale has saturated the marketing efforts and is still not making progress, something is wrong. It could be just a matter of the type of content being published, but you need to find out.
Is there a solid email list, is it current, and how much marketing has been done via email? This is an area where you may have the chance to grow your audience base if not much has been done.
Certainly, there are lots of pros to buying an online business for sale, if you are truly interested in the business itself and if you are willing to investigate its viability. And you should not underestimate the learning curve and the amount of work involved in making it profitable. Still, there are great opportunities out there, and you should investigate them all before making that buying decision.
The third factor, of course, is your enthusiasm and energy. Without it, you falter; with it, you have every shot at success!
Photo by Burst