E-commerce, if you hadn’t noticed, is exploding. As the globe has become ever more reliant on the internet, and consumers now fully expect to do business online, there has been a predictable surge in established online businesses on the market.
Technology and market research firm Forrester report that ecommerce in the U.S. will surpass the sales growth of brick-and-mortar stores over the next two years, reaching a total of $370 billion in annual sales by 2017.
Buying any business takes a lot of planning and research, but there are a few nuances that set the purchase of an online business apart from the process of acquiring a bricks and mortar enterprise.
Here are a few tips to help you on your way to buying a web-based business:
You can never spend too much time researching your selected business area, and it’s never too soon to start gathering facts.
Gaining a secure knowledge of your market will involve identifying rival sites, tracking their performance over time and checking reviews. This will help you gain a feel for what common approaches your competitors adopt, what they do well, and where they are often found wanting.
You can search the web for sites that match your criteria and approach the owners with an offer, but this will be a lengthy process, so make the most of online directories like BusinessesforSale.com. There are also website specific marketplaces that enable you to compare sites based on revenue, traffic, age and niche.
Online businesses usually sell for around what they would make, in revenue, in 1-2 years. So if an internet business brings in $100,000 annually, the asking price will probably be between $100,000 and $200,000.
When shopping for an online business, reviewing the analytics should be number one on your list.
You should make absolutely sure that the full range of performance specs are produced – this is no time for highlights, or second-hand analysis, and nothing but a complete data set will do.
Google Analytics and other common packages will include details of the most-effective search keywords, traffic volumes, and also identify traffic sources. You should also explore backlinks to gain a complete understanding of the status and authority of your chosen site. This should also contribute to a clearer picture of where, and how, site business originates.
And with any business offered for sale, make sure you explore and understand its social-media profile. Plenty of positive feedback can be encouraging, but even negative comment can clarify what needs to be addressed, and possibly signpost ways to grow the business.
An internet business demands a subtle blend of marketing and technical skills, and keeping abreast of new innovations is a must. Make sure you know what the key software packages are, and whether they are ‘standard’ or custom variants. You should also be clear whether or not the business demands specific platforms and hardware.
If you lack expertise in these areas, then involve an expert who can give you some idea of what the task of maintaining the technical side will involve, and what the likely costs may be.
In some cases, even a well-funded business idea will struggle to succeed, and experience shows that certain types of business are best avoided. These include: delivery of goods where the profit margin is low (e.g. pet foods), wholesale purchasing in order to support large-volume retail sales, or absolutely anything where your main business rival is Amazon, or some similar mass-marketing entity.
Instead, consider goods or products you can distribute digitally, niche markets, or original products you manufacture or own.
All internet businesses require have their own site maintenance routines. Find out how much time the current owner devotes to this and whether you can maintain the site entirely yourself.
If not, you’ll need to factor in the cost of employing someone to manage this side of the business.
When you’ve settled on your ideal online business and its price, a contract will need to be drawn up to define buyer and seller obligations. This might be a good time to ask the seller to provide consulting services for an agreed time after the sale, to enable a smooth transfer.
Whilst some website marketplaces provide templates for agreements, if your deal is particularly complex, you’d be better off hiring an attorney to draw up the contract at this stage.
You’ll need to write in a ‘non-compete’ agreement from the seller, but be wary; these clauses can be tricky to enforce, particularly abroad. Make sure there are no loop-holes in this part of the deal.
Buying online business can be a little less straightforward than opting for a physical company, but the perks are the same in comparison to ‘starting-up’: instant customers, traffic and cash-flow. To avoid scam operations run by sellers trying to offload a worthless product, use a reputable online marketplace.
This article was contributed by BusinessesForSale.com, the market-leading directory of business opportunities from online media group Dynamis.