7 Things to Look Out for Before Buying an Online Business

Look For Buyer February 12, 2020

7 Things to Look Out for Before Buying an Online Business

If buying an established online business sounds like a good option for you, it will be good to first establish the criteria before starting a search for an online business sale, so that you know exactly what you are looking for. You must understand the industry you want to explore, how much money and most importantly how much time you can to invest to grow the business. By setting specific criteria and your goals, you can be more targeted and keep yourself towards the right direction.

Once your criteria are set, look deeply on below 7 areas whenever you want to buy an online business:

1. Online presence quantitative – Monthly traffic to the website, page speed, google ranking on specific keywords, social media followers, customer base. Those numbers & trend show clearly what is the stage the company is at right now. However, you can also use free online site worth calculator to roughly get a quick sense of the traffic and potential worth of the company website

2. Online presence qualitative – Recognized brand, online reviews will show you a strong indication how the brand was perceived by users and will likely have higher potential to drive more traffic in the future due to word of mouths.

3. Operating model – Buying an online business does not meant only buying the company website. A valuable online business will come with proven marketing system to generate consistent leads, a fulfillment ecosystem like logistics to complete the sales, an experienced team who helps to run the day to day operation. The more it is automated the more robust and scalable it is. By fully understand the human resources structure like how much involvement needed from the business owners, how many full time or contracted staffs currently etc will give you a sense if that match your criteria that you set up front.

4. Technology & Platform – For small business, it is common that the underlying platform are built on top of some common system like WordPress or freemium site builder Wix. Those system enables small business owners to maintain and make changes easily, sometimes admin can also add functions by simply installing some plugin. Hence, you will need to understand the underlying technology and if it is easy to maintain moving forward.

5. Business models – There are lot of business models that commonly used for online businesses, e.g. advertising, subscription to a service, brokerage, direct manufacturer selling products etc. It is good to understand how the online businesses make money and how is it differentiated from competitors.

6. Sources of revenue – It is more sustainable if the business have multiple sources of income. Are those income recurring or non-recurring? Recurring revenue will reduce the spend in customer acquisition cost in the long run, the certainty of monthly income and underlying value.

7. Growth potential – If the business shows a strong grow trend, it is likely that business owners already considered the growth in their asking price. Hence, if you can identify the potential and ways to explore it, it is good to consider business that not showing growth in the past years but there is huge potential once something is fixed or some tweaks for the current working model. It will be great if you have some networks, skill sets or fund that can help the company to grow and realize its full potential.

Buying an online business is like investing in real estate. Online businesses are like digital editions of physical assets, and its values can increase and grow over time if you nurture it. Owners can renovate their houses to increase the rental and its underlying value to potential buyers. Similarly, business owners can improve their online businesses to increase the revenue and intrinsic value of the online assets. View here to see the latest online business for sale.

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