Entrepreneurship isn’t always easy. Starting a business from the ground up can be challenging for new small business owners. There’s a lot to think about, from developing a product and choosing a business model to finding your audience—not to mention startup costs and the huge time commitment necessary to make it work. If you want a business but don’t want to start from scratch, there’s another option: buying an already-established online business.
Caveat: This doesn’t mean buying a business is less work, it just means you don’t have to start from ground zero. Here are the ways soon-to-be business owners can buy an existing business that’s ready-to-go.
What are the pros of buying an online business?
If you’d rather leave the ideas side of things to others, buying a currently thriving business can have plenty of benefits.
- Stronger foundation: the initial stages of getting the business up and running (which are often time consuming and thankless) is already done
- Easier funding: it can be easier to secure financing for a business that has a proven track record
- Pre-established customer base: if it’s been generating revenue for a while, it’s a safe bet that the business has an existing customer base and a proven product market fit
- Pre-existing brand awareness: there’s less effort needed to raise awareness of the brand and build its reputation
- Ready-to-go team: if there are existing employees, you have a premade team ready and waiting to go
- Solved problems: the original owners will have discovered many of the businesses’ problems and friction points and (hopefully!) solved them, so you don’t have to
- Reliable income: there’s already the potential for a reliable income to capitalize on if the business is doing well
What are the cons of buying an online business?
- Large upfront sum: you often need to invest a large amount of money upfront to buy an existing successful business. While prices vary, you can safely assume that an existing business that’s doing well will require a chunk of cash to buy
- Renegotiated contracts: depending on the type of business and contracts the previous owners have signed, you may need to renegotiate any outstanding deals with suppliers, vendors, influencers, and other key stakeholders
- Unknown reason for sale: Why is the existing owner selling? Will this impact what you can do with the business or its future?
- Difficulty making a mark: it might take some work to turn the business into your own, since it will already come with a reputation and existing preconceptions
What should you look for when buying an online business?
There are 32.5 millionsmall businesses in the US alone and an estimated 12 to 24 million ecommerce businesses around the world. That’s a lot of businesses and a lot of choice. So what should you look for when choosing a business to buy?
You don’t want to buy a dud. Ideally, any business you’re looking to buy should be able to show consistent month-on-month revenue or at least the potential to reach a consistent level. The seller should have no problem sharing the business’s financials with you—in fact, this is a must-do before you even consider putting pen to paper and signing a contract.
It can be difficult to turn around a negative opinion of a business, which is why it’s a much better option to go for a brand that has an existing positive reputation. Check out reviews on sites like Trustpilot, scroll through the brand’s social channels, and listen to what people are saying about it online.
Take a look at the business’s current operations. If they look rusty or outdated, it could spell a problem—it can take time and resources to change things around. Smaller businesses will have less established operations, but they should still have processes in place for key parts of the workflow, like shipping and integrated tech stacks.
Online businesses rely on website traffic to stay afloat. The more traffic a site has, the more potential customers it has and the more money it can make. When choosing a business to buy, look for steady growth and consistent traffic from multiple sources. The last thing you want to do is rely on traffic from one source that will dry up as soon as algorithms change.
A business might be thriving right now, but what about in a few months or a few years? It’s important to assess the future potential of the business—for example, look at whether its bestseller is a seasonal item or whether the products it sells are a current craze that will go out of fashion soon.
Future customer base
While a business’s current customer base might be very healthy, take a look at where there’s room for expansion. Who exactly is it targeting and is that market close to being maxed out? Consider if there’s room to move into different markets and locations too.
Knowing what customers think about a business can make or break your decision to buy it. Consider the kinds of positive feedback it gets, as well as common complaints. Basically, what do existing customers like and dislike about it? And, when it comes to dislikes, think about what it might take for you to turn that around.
What types of online businesses should you buy?
The term “online business” covers all manner of business models, but the most common types of businesses you can buy include:
- SaaS brands
- Ecommerce companies
- Dropshipping brands
- Affiliate sites
- Mobile apps
- Productized services
- Blogs/content sites
- Subscription businesses
- Digital product businesses
8 best marketplaces for buying an online business
1. Shopify Exchange
Dedicated to ecommerce businesses, Shopify Exchange gives you all the information you need to make an informed buying decision, whether you want to purchase a direct-to-consumer brand, a dropshipping company, or a white label brand. Listings include monthly revenue, monthly profit, and the inventory value, so you can be sure you’re making the right choice. You can also filter listings by industry, age, and revenue and get insights into how to buy an online business.
Sellers will also provide post-sale support for new buyers, giving you time to get a grip on the processes and ensure systems are in place.
Flippa lets you browse SaaS companies, ecommerce brands, blogs, and affiliate sites that are up for sale, showing you their monthly revenue and how they make their money.
3. Empire Flippers
Empire Flippers is a cross between a marketplace and a brokerage. You can explore businesses for sale in different niches, filtering by monetization style and price.
4. Side Projectors
Side Projectors specializes in sharing side projects, from SaaS businesses to ecommerce brands and mobile apps. Prices are on the cheaper side because the projects tend to be smaller.
BlogsForSale focuses on listing blogs and profitable websites that are up for sale. Listings provide background information about the business as well as monthly revenue and the monetization method in place.
6. Motion Invest
Browse websites in a variety of different niches and industries and get hands-on support from the Motion Invest team before, during, and after your purchase.
7. Digital Exit
Digital Exit showcases highly profitable businesses for sale in a variety of niches. Compare revenue and yearly income across a range of industries.
Latona’s is more of a brokerage than a marketplace, but it still lets you browse listings that are up for sale, with a range of detailed filtering options.
How do you get a great deal on an online business?
You don’t want your money to go to waste, right? Here’s how you can make sure you’re getting the most for your dollars.
Look far and wide
Casting a wide net can help you find businesses you might not have considered. Use a mixture of the methods mentioned above to source potential businesses to purchase and compare prices, revenue, and other key factors.
Rate opportunities quickly
Use a set of criteria to measure the opportunity of each potential business without wasting too much time. For example, you might rate each of the following elements out of 10:
- Growth potential
- The reason for selling
- Hours needed to invest
- Existing reputation and customer base
Obviously a business that rates high in all these areas will come with a higher price tag, but you’ll know that it comes with robust revenue and the potential for growth.
Do your due diligence
Look into legalities around the business, including taxes and operations, and find any problem areas before you go into negotiation. The more information you have, the more informed you can be with your offer.
The listed price isn’t always set in stone. Depending on the opportunity rating you’ve given a business and the information you found out during the research stage, you can go into negotiations with the seller to get a better deal.
Tips for buying an online business safely
Buying an online business is risky. There’s the potential for getting scammed and making the wrong choice. To make sure you’re doing things safely, consider the following:
- Carry out thorough research beforehand
- Speak to past customers and employees to verify the business model
- Check financials and other key documents with a fine-tooth comb
- Consult a solicitor or lawyer to help you with the process and paperwork
- Ignore aspirational pitches and stick to the facts
- Find out why the business is for sale
- Speak to suppliers to confirm existing contracts and deals
- Be cautious!
Buying an existing online business can reap huge rewards. It means you don’t have to start from scratch and can piggyback off the success of a pre-established brand that’s already proven its audience, product, and market fit.
However, it’s really important to carry out due diligence to make sure you’re getting a good deal and are buying a business that has the potential to grow.