Buying A Website Business For Sale

We have seen a significant increase in the number of people looking to purchase website businesses recently.

Personally, I love the online business model. My company now does business in over 80 countries. The business has no inventory, no receivables and a handful of employees; we outsource nearly every key function except customer service and support. I have absolutely no technical expertise. The entire business is automated and it’s incredibly profitable. An ideal business model, isn’t it?

Perhaps the best part about an online venture is that you can get into one quickly and inexpensively whether you buy an existing one or start one from scratch. However, multiples for successful online ventures can be higher than most bricks-and-mortar businesses because of many of the factors you’ll read about here. Additionally, because an online business can be run from anywhere at anytime, it’s an ideal business to have if you’re not yet ready to take the full plunge into your own business or you like to travel, work remotely or casually.

Don’t be misled thinking it is all fun and games. But it is the kind of business where, if you put in the effort up front and automate every aspect of it, it will pay enormous ongoing dividends relative to the time expenditure. Right now, it takes me about two hours each day to handle the operational side the business, if at all.

If you want to buy an existing profitable venture, keep in mind that the multiples may be higher than traditional small business valuations since there are so many great benefits to them. You should also know that the financials of most pure Internet businesses are generally simpler to investigate because there are generally no cash sales, and almost all of the transactions are via credit card.

Likewise, if you decide to start one from scratch, you can build a Website, and begin initially marketing for just a few thousand dollars.

Here’s What You Need To Be Aware Of When Buying an Existing Online Business:

• Online businesses go far beyond building a Website. It’s not an: "if I build it they will come" business. Sure, you can have clients worldwide, but they have to find you before they can buy your goods and services. If not, it would be like Wal-Mart opening a new store with more products at deeper discounts, then locating it ten miles offshore in the ocean. Even if they offered a 50% discount off every item, nobody would make the trip to the store. You need to figure out how to get people to the store (the Website). In other words, you need to market the business and figure out how to get the store to the land where all the people are (translation – how to get people to your site).
• Niche products work great.
• You’ll need to do extensive research to learn about the competition, the industry, products, competition, etc. It’s not as easy as finding out about a local bricks-and-mortar business.
• You need a bullet-proof non-compete clause with the seller since it’s so easy for them to open up a competing business in another name, country, etc. That is why you MUST have a large balance of sale as part of the deal.
• Make sure that any products or services being sold, if not proprietary, are going to be available to you from the various suppliers.
• If the business relies on email marketing campaigns, investigate how they get their lists and prospects. No matter how great email marketing is, spam is out of control. It will eventually become highly regulated with massive penalties for offenders.
• Stay away from fads or any products that may become subject to government intervention or stricter controls, such as pharmaceuticals.
• Verify any potential liabilities, guarantees, etc., that may have been offered in the past. Get copies of old site versions from the owner. Some sites began by offering 1-2-or 5-year guarantees on their product. These claims can come back to haunt you. You’ll need the seller to indemnify you from any future claims or you need to have a mechanism to offset any claims against the balance of sale.
• Get detailed listings of all individuals who have access to the site’s backend or passwords for accounts. In fact, make certain that you change all passwords once you take over.
• If the seller developed the site, bring in a tech-savvy individual to review the actual programming. Quite often the site evolved through the seller’s design and he/she may have kept adding little bits of programming to it. While it may make sense to them, it may very well be a “plate of spaghetti” to someone else and can never be figured out.
• Get copies and ownership to all source code for the site.
• Meet with the webmaster and any other people who work on the site if you won’t be doing the work yourself, and make certain that the relationship will continue.
• Investigate the credit card processing. You might have to put up significant personal guarantees with the merchant bank to process credit cards. In fact, you may want to check this out in the very early stages of your investigation.

You can locate online businesses for sale at various online businesses for sale databases and there’s a ton of them on eBay, but many seem like scams to me so be very cautious.

It’s been said that the best business is the world is everybody else’s. However, an online venture, when set up and run properly, is, without question, one of the best business models around. The key of course, is to provide a profitable product or service in a sustainable business.

Click here to learn more about buying an online website business for sale

Have a great week.

Comments

[Brad Yeager]

Richard,

We feel that another reason for e-commerce or online businesses justifying higher multiples is the pure scalability factor of the internet. There is no limit to the amount of traffic and potential customers you can drive to a site with combination of paid and organic search, social media, traditional marketing, email marketing etc.

Often we hear from our new ecommerce buyers how shocked they are at how much more they are working. Online or not it is a business and no business will grow or be successful if not run properly. A web business were it is possible to work from home or a remote location does not mean a reduction in the hours needed to run the business correctly. Ecommerce and online businesses have may not have a physical location, employees or other traditional overhead , but they have a unique set of challenges all their own. Marketing Campaigns need to be built and continually tested, the website itself needs to be continually tested and optimized to get the best possible conversions, content needs to be continually updated to rank better organically in search engines, landing pages need to be implemented, email marketing needs to be segmented, web analytics needs to be analyzed to make intelligent decisions. Outsourcing many if not all of these tasks is possible, but buyers and new online business owners should be aware that you will most likely get back what you put into it and rarely does a successful business need only a few hours a day.

[Donald Cranford]

Hi Richard-
Thanks for very much for the post. It's a pretty interesting time to be considering buying a website business. This is a great primer for entrepreneurs. I would urge everyone to do their homeword before making such an important investment, though there is a lot of profit to be made.

[Wes Brown]

What types of internet businesses are seeing that are the most successful?

FROM RICHARD: This is a really open-ended question and difficult to answer in a short space. I would suggest you read through some of the articles at www.diomointernet.com

Email me through the contact page if you want to set up a call together to discuss in greater detail

[Metal Buildings]

The bullet points are so beautiful and worthy to note before plunging into internet business.Net business has to be carried on with utter alertness and tactic.

[Inbound call center]

I enjoy this blog and got knowledge about how to maintain website business.thanks for giving good tips to develop the business.