There are two options when you want to enter into the ecommerce world: build a business from scratch or purchase an established brand. Purchasing an established brand may seem like an easy feat but, just like any other business decision, it needs to be approached from a position of knowledge and precision. The following is the advanced guide to buying an online business.
Identification of needs and goals
Once you have decided that you will purchase an online business, you need to articulate all your needs and list them in order of priority. This gives you direction on the best business to purchase. Without adequate knowledge on your needs, you may purchase the wrong business which is not only a waste of money but also time and energy. You must also identify the end goal or goals in purchasing the online business.
Identify potential online businesses
Once your needs and goals are clear, you can now identify potential online businesses that you can purchase. At this point, it does not matter whether the business has been put up for sale or not. But how do you go about this? What parameters should you look at? The first and most important goal is the level of relevant traffic. Online businesses thrive when they have a constant flow of potential clients. The higher the flow, the higher the likelihood of success.
Next, you need to determine whether the business has been operating within the confines of the law. Does the online business have the licenses and permits to operate within the areas their current areas of operation? Are they compliant with the taxation guidelines? Are they compliant with different international financial standards, in the case of international businesses? What about the labour laws? A business that is non-compliant may result in negative legal consequences and should not be purchased.
How has the business been operating? Do they have a structured mode of operation? While it is easy to introduce structure, its uptake and implementation may give the impression of starting a business from scratch. Therefore, the lack of structure should be evaluated thoroughly before any contracts are entered into.
The profitability of the business is extremely important. In most cases, entrepreneurs wish to purchase online businesses that are already profitable. When the businesses identified have been facing financial turmoils, in depth analysis must be carried out to ensure that the purchase is not a waste of resources. Some businesses may maintain a separate set of doctored accounts and financial statements to impress investors. As such, you must be vigilant and thorough in your analysis to identify businesses with a sound financial track record.
You must also query the ownership of the business for a number of reasons. First, to eliminate or minimise the chances of falling into the traps of con people. Secondly, to ensure that you are dealing with reputable individuals and therefore eliminate the risk of poor brand reputation. Third, you must ascertain you are dealing with the people who have power to transact on behalf of the business and its owners and therefore acquiring the business in a legal way.
The actual purchase
Once you are satisfied with the information you have gathered on all potential online businesses, and are certain that they have the potential to meet the needs and goals identified, you can now make your move. A good way to do this is to structure your offer to be irresistible. The terms and conditions of the deal, the financial offer and even the roles of different parties during the transition period should be ideal but not too good to be true. An irresistible deal may change the minds of people who did not have the intention of selling their online businesses in the first place.
Through out the process, it is ideal to enlist the services of financial analysts, market analyst and legal experts such that they guide you in asking the right questions, analysing data correctly and ultimately making the right decisions using the available information. Legal experts will ensure that the contracts entered into are in your best interest.
