When it comes to business opportunities, it can be hit or miss when it comes to finding success, with a myriad of reasons why it may or may not pan out as hoped. That still doesn’t stop some from jumping on a chance to purchase an existing online business. But how do you know if buying an online business is the right choice for you, and what steps should you take to ensure the best possible outcome? Let’s take a look at our top tips for buying an existing online business in 2023.
Is Buying an Existing Online Business a Good Idea?
Of course the answer to this is dependent upon many things, but if all else is above board, then it should be a resounding yes. Not only does it mean you don’t have to start from scratch with the infrastructure, but hopefully there’s a built-in audience, recognizable branding, and market reach at your fingertips – as well as immediate profits. Buying an existing online business can erase many of the challenges that an online startup would face, but it can also come with its own potential pitfalls.
As with considering any potential business opportunity, the prospective buyer should research the history of the business, making sure there is access and ownership to all the online assets, as well as considering the projected ROI to ensure that it is still a viable venture. Is the reputation positive? Have the financials been consistent? Is there potential for further growth? The last thing any investor wants is a dud on their hands, so do the due diligence to make sure it’s a quality purchase.
How to Buy an Online Business
If an existing online business has been found, what are the steps to making the purchase a reality? Without getting too involved, here are the steps in their simplest form:
- After understanding why it is being sold and deciding to continue, do a valuation of the business.
- Verify that the seller has ownership and access to all aspects of the business including domains, hosting, website administration, social media accounts, and of course, any related ecommerce aspects.
- Next, negotiate a price and submit a Letter of Intent (LOI) – this will get the ball rolling.
- While there will be lots of legal documents, do not overlook anything; be sure to have all the legal ducks in a row, including that ownership and access to all marketing platforms – something that is very easily overlooked. We discussed this in a previous blog post that can be read here.
- Once you secure the funding, then it’s time to close the deal.
Since we are not lawyers, we would prefer to leave it up to the professionals when discussing the legalities. One source we found helpful to navigate business legalities can be found here.
What to Look Out for When Buying an Online Business
Earlier we mentioned a few things to consider when considering a purchase, and we want to reiterate them as well as delve into a few more important considerations:
- Business Performance History and Financials – from a positively trending revenue to a successful history of performance, while there can be some hiccups, there needs to be verifiable details on exactly how the business has been run and performed.
- Consistent Web Traffic and Ranking – using tracking reports such as Google Analytics, verify the history of the web traffic and ranking so that a clear landscape of the optimization and progress of marketing endeavors can be understood.
- Competent Sales Model and Operations – understanding how the business works, how they provide services and complete a sales cycle can explain just how much work might be involved once the purchase is made. If the undertaking requires more than you are willing to give, it might not be the best choice to make.
- Access to Digital Assets – this one tends to stump even the most cautious buyers. Making sure to have access to all social media accounts, domain names, hosting accounts, product photography, client lists, contracts and more, can ease the frustrations associated with the purchase. We cannot stress this enough! Please take a moment and read further.
- Positive Feedback and Reviews – while no business will ever have 100% positive reviews, it is important to take the time and listen to what customers have been saying. Patterns will emerge, and if the purchase goes through, understanding where the cracks are can only help to better the potential for profit.
Getting Help with Your Newly Purchased Online Business
So the sale is complete and you are the proud new owner of an online business. What do you do now? There are some things that seem common sense, and we’ll discuss those in a minute. But where can you turn for help in the meantime?
If you’re faced with hosting, domain, social media and website issues, the best thing is to reach out to the previous owner to see if something was missed during the sale. Hopefully there is a webmaster to help with the website, or a point of contact for all social media and analytic accounts. A firm like Blink;Tech can assist in some areas like hosting, domains and the website, but social accounts might be more difficult to clean up without the assistance from the previous owner.
If the business is a larger entity, there is hopefully a team waiting for the new leader to take charge, and who will more than likely be willing to assist however they can to make the transition seamless.
- Start with the data (numbers don’t lie!) and install a transition team to help lead the changeover. Using the data, decide on a course of action in regards to operational changes.
- Talk with the existing employees and communicate with all shareholders so that no one feels left behind or ignored. Understanding their point of view and offering them input will go a long way in building a team mentality.
- Once you are fully in control, don’t forget to keep the door open, to customers, shareholders, and employees alike. It will take time to find a rhythm and flow to reach success, and it cannot be done without the entire team.
If you have recently purchased an online business, or if you’re in the market to do so, and you have questions, feel free to reach out to us! Blink;Tech is a true tech partner, which means we are here every step of the way for our clients. Call us at (941) 548-9950 or complete the contact form below!