Is your life in a snag? Are you dealing with a midlife crisis where you believe you want to hop on the bandwagon of online entrepreneurs but don’t have a unique enough idea or don’t know where to start? Well, there is an answer to your prayers my friend. Buy a pre-existing profitable business online! Yes, you heard it right. Here are 7 things you need to keep in mind to ensure you are buying a profitable business online –
1. Find the perfect fit that matches with your interests
As the saying goes – “One size doesn’t fit all”. The many, many lucrative offers may have your head spinning with which one to pick, but think it through first. Don’t just jump on the first chance to buy a business without evaluating it first. It needs to fit your criteria as well as your personality. You may be buying an online business just as a secondary investment, it should still be aligned to your interests and personal domain strength to take it to the next level. Ask yourself some tough questions –
- Do you have the skill set and/or the experience to match the niche of the business?
- If not, are you willing to grow your skills in this domain? Is the seller offering training and support after the sale for a period of time?
- Do you have the required contacts to scale up the business?
- Does this investment strategy excite you to keep you toiling hard when the going gets rough?
Well if your answers are mostly yes, you are moving in the right direction.
2. Ensure your financial health for personal investment
Well, you made it past the first hurdle. But the journey ain’t over yet.
The natural next step would be to think of budget constraints. Make sure you are ready to invest in the beginning due to the learning curve to reap the benefits later on. And keep in mind the ROI factor to ensure you only invest the amount you are comfortable if lost. You may borrow from peers or take a loan to complete the transaction.
Now to the part of putting in the time. Don’t take this lightly. In the beginning, it may seem realistic but it is a very undermined concept. Moving towards automation and streamlining different parts of the business will definitely reduce the burden an owner personally feels. So if you feel you are ready to invest your valuable time in this investment, all systems go!
3. Perform preliminary audit
Some people forget that the key is in the details. Don’t overlook them. Before moving on to the legal due diligence and heavy lawyer lifting, make sure you have checked –
What the sale includes – Source code of the website, domain, admin access to social handles, mailing list of existing and potential customers, logo and branding assets, list of suppliers/manufacturers, staff’s records, inventory – are a few basics that are mandatorily included.
Financials – Net revenue, Launch till date financial records, Linked Bank accounts, Payment Gateway details,staff’s salaries,profit after all due payments.
Legal – Deed transfer, Multiple partners details if applicable, proprietary documents, etc.
Marketing channels – Online/offline, third party sellers on other marketplaces,etc.
4. Check the authenticity of marketplace
In the US alone, online sales are projected to reach a record of more than 476 billion US Dollars. These numbers indicated what a profitable business can achieve in the next 5 years. But all that glitters is not gold. There are many platforms where you can buy an online business but not all are reliable. Just make sure they are trustable and authentic like Exchange Marketplace to turn all your business ambitions of being a true entrepreneur into a reality. Don’t tell us later that you were not warned.
5. Check offline presence too (Brick and Mortar Stores)
Physical stores account for approximately 94% of total sales with more than 49% Americans preferring these stores rather than shopping online. In case, the business has physical presence as well as online, make sure to personally visit and get a feel of the place.
Visit as an anonymous customer and see the staff’s behaviour and their readiness to solve customer complaints. Observe the inventory and other demographic factors including location, competitors and footfall. This can give you a clear head-start for areas of improvement and complacency.
This is also a clear indication of the potential of the business to expand and its profitability in the future.
6. Analyze the website traffic
As a new business, the most important thing is that it gains traction and stays relevant. In a pre-existing business, if it already has traffic – half your job is done. You just need to ensure future growth. But while buying a business, you need to make sure that you have all your facts –
- Where is the traffic coming from?
- Is the traffic consistently growing? Comparing trend reports over weekly/monthly/yearly periods?
- Are there any major spikes that need to be questioned? Can this be leveraged to increase engagement with customers?
- Are all the trends organic? No paid research is causing too much inflow which can cause variability?
Make sure that the traffic is scalable and is coming from reliable sources. Keeping these trends in mind makes valuable changes in the system possible which ultimately converts into happy returning customers.
7. Check their clientele
For a business to grow, its clientele needs to grow with it. A select handful will not achieve the desired influx to a profitable business but rather an engaged and expanding client list will.
When you decide to buy a business, make sure to dig through previous records to see how engaged the customers feel and that they are being well taken care of. This includes both online and offline. Keep a track of repeating customers as well as reviews. Also keep in mind whether inquiry and complaint forms are diligently answered or not. Customer Support surveys are also a great indication of the health of the business.
For a business to thrive, it is paramount that its patronage is also thriving.
Besides the above-mentioned pointers, make sure to do your due diligence on the business and have supervised paperwork signed and reviewed. Buying a pre-existing business already gives you an edge and the above steps will give you an even higher chance to succeed in this overachieving market.