Starting a business from scratch requires long hours of hard, tedious work, and even then, you’re not promised that it’ll pay off in the end. We have tons of respect for businesses that rose from nothing to become successful in their industries. But, sometimes, going this route isn’t always the best, especially if you don’t have the capacity needed to persevere. Instead, why not look at buying an existing new online business where the foundational work has already been done for you?
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Why buy an existing new online business?
Buying an online business has pros and cons like any other business; however, it does come with some specific benefits. For example, many online businesses revolve around an online marketplace or customer base, which allows you to work remotely. This in itself reduces the costs of renting offices or purchasing other assets that other businesses would have to.
You’re also buying a business that is already developed, depending on the business you choose to buy. If you choose carefully, you could find a business that perfectly matches your skill set, one that’s already established with a good reputation and consistent traffic that converts to regular sales. Better yet, buying an existing business reduces the amount of foundational work you need to do to get it going.
A guide to making buying a new online business
Buying a new online business is very similar to buying any other business. However, there are some specifics that you may find different. Here’s a guide to help you:
1. Identify a prospective business
The first step in buying a business is finding a business to buy. Because we’re looking to buy a business mainly run online, the best place to look would be on an online platform offering business for sale. That said, don’t limit yourself to these sights. If you’ve got a business broker involved, ask them where the best place would be to look for a business and give them your preferences so they can do research for you, too.
If you’ve found a business that suits your preferences on a broker’s listing site, contact them directly to ask for more details. You may be asked to sign an NDA (non-disclosure agreement) for any information they give you to protect the seller’s information. You can check out businesses for sale here.
2. Review the business
Naturally, the next thing you’ll want to do is review the business. This involves taking a closer look at whether or not the business is a good fit for you. At this stage, you might not have as much information as you would during the due diligence period, but you can ask for certain documents and information to display the business health; for example, you could ask for documents on the:
- Business operations and practices
- Current marketing trends and clientele
- Opportunities for growth
- Website traffic and sales conversions
- Any liabilities or assets
- The financial performance of a business
3. Make an offer
Once that’s out of the way and you’re still interested, it’s now time to write a letter of interest (LOI). An LOI is a formal letter that’s a non-binding agreement between you and the seller of the business in regard to your desire to purchase the business for a certain price. When writing up an LOI, you may want to factor in the following:
- Be explicit about the structure of the offer, how much it is, if any is held back with conditions, etc.
- Be sure to add whether or not you’re getting financing for the purchase
- Include a non-compete
- Make sure that you place the offer early in case a competitor makes a better offer later on
4. Perform due diligence
If the seller agrees to your offer, you’ll start moving forward with the more in-depth details of the purchase, like doing the due diligence. This is when you or your broker goes through all the company’s confidential documents like financial statements, legal documents, tax obligations, and other specifics to confirm that the sale is above board. With an online business, the due diligence would include looking at digital assets like websites and how much traffic they get, how much maintenance fees are and any other online details that need to be checked.
5. Sign legal documents
When you’re happy with the outcome of the due diligence, it’s time to make it an official by signing the relevant legal documents needed to transfer the business and its assets over to yourself.
6. Facilitate the transition
If needed, you may need to make a plan with the previous owner of the business to facilitate the transition, especially if there are multiple employees and clients involved. This just makes the process smoother for everyone involved.
Final Thoughts
Look, any business is going to come with its own challenges to overcome, so we aren’t saying that buying an online business is going to be smooth sailing. But you do have the benefits of having a business that’s functional, already has a client basis and reputation, and is possibly already turning a profit. Starting with all that certainly gives you a leg up!
