Practical Steps to Buy a Profitable Online Business
As an online entrepreneur, you can start from scratch and build an online business from the ground up. Figure out your niche. Set up a website. Build an email list and market to it. Write blog posts and other content. Create products or promote affiliate products — or use the drop shipping model.
It does take time before your new online business will actually start making money and become profitable.
The alternative is to buy an existing already established online business for sale.
What to Look for When Buying an Online Business
To be clear, you’re not just buying a website. You’re buying a complete business with products and customers, proven marketing methods to generate leads and make sales, a social media presence, ongoing ad campaigns, an email list, even employees and/or virtual assistants.
This is a turnkey opportunity that you take over. After you buy it you can let it run as it was before or attempt to increase profits by making changes — perhaps you recognize something the current owner is not doing that could boost sales. Once you buy, it’s your business.
The online business should have a track record of sales and profits you can see before you buy the business — always check out the financials. Don’t rely solely on what the seller tells you. One thing to keep in mind is that you shouldn’t buy an online business for sale solely because it is a big moneymaker. That’s important, of course. You should have an interest in the niche too.
A great thing is that you don’t have to figure out the business for yourself once you buy — you might have been worried about that. Often, the seller will include training for you to make sure you know how everything runs.
Buying an online business is kind of like buying an offline business; such as a popular pet store in a community, complete with shelves full of products, relationships with vendors, a lease on the space, and more. Setting up your own pet store would mean finding a storefront to lease and negotiating the rent, researching the best location, renovating the interior as needed, putting up signage, advertising in local publications, sourcing products… You get the idea.
By buying a business, whether it’s an online business for sale or a bricks and mortar store, you’ll shortcut around many of the time-consuming and sometimes expensive tasks required to build a thriving venture.
Of course, you will have to pay to buy the site. So you have to measure if paying that price is worth not having to build a complete e-commerce business yourself. Also keep in mind that really successful sites will be quite pricey, with prices in the tens to hundreds of thousands of dollars. But you can find full-fledged online businesses for a few hundred or a few thousand dollars too.
A good rule of thumb is to multiply the annual profits of the business by 2 or 3 times to get a fair for the sales price. Factors like assets, a good domain name, a recognizable brand, a large amount of quality website traffic, a good social media presence, and a large email list of responsive names might also influence the purchase price.
Here are some other things to keep in mind that should influence your decision. You want to make sure the business you want to buy:
- Is growing
- Has multiple streams of income and doesn’t really on just one product
- Gets traffic from a variety of sources
- Has revenues that are consistent from month to month
- Has systems in place for marketing
Where to Find an Online Business for Sale
Great news — there are plenty of e-commerce sites for sale out there. And there are plenty of places to buy them too. Here are four great options. Something to always have top of mind no matter where you buy the business is to do your due diligence. Just because a site is listed for sale on a reputable platform doesn’t mean it’s completely legit. The seller may have inflated his numbers as far as traffic or sales. Just because something is on the listing doesn’t mean it’s true. Do your research.
Online marketplaces feature list of online businesses for sale, usually organized by market niche with statistics like revenue and profit, web traffic, email subscribers included. You can quickly scan dozens if not hundreds of sites for sale. If you see one or several you like, first check it out online, then just send a message to the owner through the marketplace’s messaging system.
When you correspond with the owner ask any question you like about their business model, their marketing methods, where they get their products… if they’re wanting to sell, they’ll do their best to answer your questions.
For example, the massively popular e-commerce platform Shopify has a marketplace where you might find the ideal online business for sale for you. And the cool thing that Shopify gives its own valuation for how much they believe a web business is worth and a look at its revenues in easy to read chart form.
Sometimes you’ll encounter brokers running the sale on behalf of the owner. As you correspond with the seller, you can also start bargaining. Send them a lower price offer — oftentimes sellers are flexible, especially if a website has been on sale for a while.
Here are some online marketplaces to check out:
How to Buy an Online Business at an Auction Site
You can get a bargain on an online business by going on an auction site. Like a regular online marketplace, you’ll find long lists of e-commerce sites for sale. But instead of paying the list price or contacting the seller and negotiating, you bid using the auction process.
Just like any auction site for consumer goods or collectibles, you enter in what you’d be willing to pay for the online business. Other potential buyers might put in a higher bid… and you decide whether to increase your bid. Auctions are run for a limited time and whoever is at the top wins — and gets to buy the site.
There is a learning curve with putting in bids in an auction is a skill all on its own. In particular, look for “shill” bidders who are acting on behalf of the website for sale trying to drive up the price.
Buying an Online Business Through a Broker
Website brokers facilitate the buying and selling of e-commerce businesses. Perhaps the seller doesn’t the time or inclination to deal with potential buyers. So he hires a broker to put the site up on the online marketing places or auction sites and handle any inquiries. There is a bit of security here in that because, more often than not, the broker has vetted the site before agreeing to try and sell it. He doesn’t want his reputation ruined if his client scams somebody.
At the same time, they’ll have lots of questions for you to make sure you are a serious buyer — with the money to buy the site.
Another advantage of using a broker is that they are experienced. They know how to conduct this transaction and the exchange of money. And they can handle any problems that pop up. Brokers only get paid once the sale is final, so it’s in their best interest to make sure everything runs smoothly from beginning to end.
One broker website worth checking out is https://feinternational.com. You can also network with online business owners on forums to get the names of other recommended brokers.
Buying an Online Business Directly From the Website Owner
This last technique is a bit bold. Basically, you make a list of e-commerce businesses in niches you are interested in. You might just know them because you are a customer or you’ve seen their ads online. You can even check out Facebook pages and forums related to your niche to see what sites pop up in the comments.
Using available tools like Alexa.com, you’ll figure out these sites’ website traffic. Sign up for its email lists and follow its Facebook pages, so you can see its marketing in action. A simple Google search might yield all sorts of information — including some hints of how it’s doing financially.
Now you contact the website owner, which might be listed on the site itself or yielded through looking them up on Whois.com. Then you contact them and tell them you are interested in buying their website. Be polite and show you are serious. But no need to make an offer at this point. They might get back in touch with you or maybe not.
Next Steps for Buying the Perfect Online Business You
Now you’re ready to find your new online business. Why not try all of the methods above to see which one fits you best. Start scanning the sites that are available. See what the asking prices are. Just doing that will teach you a lot that will help you make your own deal.
And remember that before you put in offers and certainly before you buy something, make sure you do your due diligence and run the numbers to make sure the financials, traffic, and other important features of the business are accurate.
Buying an established business can certainly be a great way to buy into a successful venture and start making right away… you could even make back the money you invested in the purchase fairly quickly.