Big brands have always have a huge retail-environment advantage over small businesses. But thanks to the internet, the playing field is now even. National brands and no-name brands can now compete for customers side by side.
If you combine an excellent product, precise targeting, and the right advertising platforms, you can quickly transform a small brand into a profitable business. However, starting a business from ground zero is not for everyone. Some entrepreneurs prefer buying established e-commerce sites.
The buying option allows you to jump straight into business development and growth. You don’t have to worry about brand conception and the initial monetization strategy.
If you’re looking for an online business in a local market, such as a business for sale in Houston, here is what you should look out for:
First, you’re not just buying an e-commerce site. You’re buying a business operation with proven marketing models, products, customers, email lists, ongoing ad campaigns, social media presence, and even employees.
So the online business should have a track record. Have a look at sales and profits records – always audit the financials. Don’t take the seller’s word for it. Also, keep it in mind that you shouldn’t buy a business just because it’s a huge moneymaker. Running a thriving business takes in-depth knowledge and a keen interest in a niche.
You will have to pay for the site. So make sure you get value for your money. The rule of thumb is to multiply the annual profits by 2 or 3 to get a fair sale price. You should also consider the quality of website traffic, social media presence, size of the email list, and how recognizable the brand is.
Where to buy an online business
Online marketplaces are the most popular places to buy online stores. To spot viable opportunities in a marketplace, you scan through a variety of listings in different niches. You can also ask for additional information on your preferred listing – this alerts the seller of your interest. Using this method, you’re more likely to find accurate data, as most information needs to be vetted by the marketplace.
If you’re sure of what you’re after, you can reach out the site’s owner and see if they are willing to sell. To contact the owner, use the contact information on the site. You can also do a WHOIS search to find the site owner’s information.
Doing due diligence at this stage is critical because if you discover off-putting trends, you can look elsewhere. Analyze the site’s backlink profile and traffic before you make any commitment.
When you reach out to the owner, it’s important that you make it clear that you’re serious about buying. If you create an impression that you aren’t serious, the owner will certainly not engage with you. Proper preparation and the presentation of a business plan will help you get attention and make smart decisions.
When using auction sites, potential buyers get to place bids for listed websites. That’s what makes auction sites different from marketplaces. Sellers on auction sites can attract more interest on their websites and thus drive up prices and make more money.
But at times, a seller can auction a site without a good grasp of its value. This gives the market a chance to determine the value through voting with bids. Auction sites are an attractive option, but listed businesses are not always vetted.
You, therefore, assume more risk, as there is less focus on income and operational verification. Due diligence, therefore, lies with you. Determining quality listings is harder, and shill building – the creation of fake bidding accounts – can unfairly inflate prices.
You should, therefore, approach bidding with caution, and you should be aware of best practices when bidding on local websites.
Online brokers can be a great option if you don’t have the time to search or if you’re more comfortable with having a professional handle the negotiations. Brokers know what to look for and can quickly determine whether the site owner is making genuine claims.
An online business broker is like a real estate agent; their job is to make the purchase process as painless as possible. They also support you if anything goes wrong.
Brokers are paid after the transaction is complete. So it’s in their best interest to find you a great deal and handle the acquisition process from start to finish.
Remember, before putting in an offer and before you purchase anything, do your due diligence. Run the numbers to make sure traffic, financials and all other vital business features are accurate.