The online business sector has exploded over the past few years. The sector has certainly had time to mature and there are a lot of options now for anyone who is looking to buy a business.
This could be a far more cost-effective option due to the absence of physical premises. It will also give you far more flexibility in terms of location which broadens your search.
Buying an online business, though, comes with its own set of guidelines that you will need to check out when finding the right one. Read on to get a better idea of what to look out for when buying an online business.
When buying a brick and mortar shop, footfall is important so that you know how many potential customers you have. When it comes to an online business, the traffic that a website gets will convey the same message to you.
It is important, however, that you assess what kind of traffic the website has. Significantly, the sources of that traffic should be diversified. In other words, there should be traffic coming from searches, paid, social and direct sources. If a website relies on one particular source too much, there could be problems if something changes like a Google algorithm update.
The best way to assess the quality of the traffic of a website is to look at its history. Are there certain sources of traffic that have been declining or have not been consistent?
When you’re looking to buy an online business, you should get a clear idea of what kind of growth the business has experienced. Make sure that you can verify the figures that the owner has reported to you.
It is most likely that you will be looking for a business that has a proven track record. When buying a brick and mortar business, you will do a thorough due diligence of their financial records. There is no difference if you are buying a business online.
Look at what the revenue for the business has been since it started. Is it only profitable at certain times of year? Has the revenue been declining in recent years? Get a clear account of the expenses that are involved in running the business. Have a look if there is anywhere that you could cut back.
Most importantly, you should be looking for ways in which you will be able to grow the business once you have purchased it. Will you be able to increase the traffic and keep growing the business regardless of trends or fads? Has the business invested in mobile specific features
Is it the right business for you?
Finally, you have to make sure that you are buying a business that is the perfect fit for you and your life. This includes making sure that you have the right skills for the job. If you don’t, you will need to factor in what the cost of an employee with the appropriate skills will be.
Alternatively, you need to find out if the seller is willing to offer you training and support during the handover period. No matter what, though, you need to be excited about the business and eager to make this yours.
There are a few entrepreneurs who look at purchasing an online business because of the potential to fit the business around an already established lifestyle. If this is you, you will need to be wary that current owners tend to advertise that the business takes less of your time than it will in reality- especially in the first few months!
By Jo Thornley, Head of Brand and Partnerships at Dynamis. Joining in 2005 to co-ordinate PR and communications and produce editorial across all business brands. She earned her spurs managing the communications strategy and now creates and develops partnerships between BusinessesForSale.com, FranchiseSales.com and PropertySales.com and likeminded companies.