- Why You Should Buy an Online Business Instead of Building One From Scratch - November 18, 2021
Good news. You can purchase an existing online business.
Whether you’re using an online marketplace, personal network or broker, there are many avenues to purchase an online business. Some business owners no longer have the passion to run a business or a new venture may lead exiting business owners to a fresh journey.
Whatever the reason, there’s a business owner readily available to sell their online business to you.
Although the idea of starting an online business from scratch sounds exciting, buying an existing business can come with many rewards when purchased with thorough due diligence.
You can expand an existing business.
If there’s a particular niche that you’re looking to break into, chances are there is someone who is looking to sell their business. If you have the expertise, think long term: What are some ways that you can grow your business?
Look at factors like historical sales revenue or organic traffic. Then have a concrete, set strategy in place to optimize the business.
This may look like hiring an SEO strategist or content creator to create tailored, engaging content for your audience.
By expanding an already-existing growing business, the opportunities for return on investment (ROI) are fruitful.
You can save time and money.
Disregard licensing fees and the hefty costs of building a website from scratch or purchasing a domain name. Starting an online business from scratch can be time-consuming and costly. If you purchase an existing business, the majority of the heavy lifting would already be done for you.
The money you may have used for startup fees can go to purchasing a business with already established traction. If you don’t have capital to purchase a business, there are alternative resources like SBA loans (small business loans) and seller’s financing, where you receive a partial amount upfront, and the remainder of the loan is paid over a period of time with an agreed interest rate.
Instead of lifting your business, you can hit the ground running by hiring the right team to continue business operations and sales. After all, time is money.
An existing business has an established customer base.
When it comes to growing your business and generating sales, a loyal customer base is important. An already established business with a consumer base can save you time and effort in the beginning phases of ownership.
Instead of spending time on marketing to generate consumer interest in the beginning, an already established customer base expands with the growth of your company.
For example, if you purchase an e-commerce business, think of new inventory to add to your lineup. Perhaps you can incorporate seasonal deals, referral programs or promotions that will attract new customers.
Ask yourself: What are some ways I can continue to expand my customer base?
Analyze your business’ customer reviews and how others in your industry are maintaining and attracting new consumers. There’s so much to learn by mirroring and doing it even better.
It has a strong brand.
Think of your favorite brands. Perhaps some big-name brands or a local business come to mind. What makes them special to you? Whether it’s nostalgia, great customer service or values, a brand is memorable and stands out from the rest.
If done correctly, an existing business will have a strong, growing brand reputation and a potentially large customer list with a repeat customer base.
Find a business with a strong online presence; this can look like a large following with high engagement on social media channels. From there, continue to build on the brand and find other avenues to expand your brand awareness.
Truly hone in on your business strengths and elevate factors that make your business stand out. Do you have a cruelty-free honor code? Make sure your consumer base is aware of that. Someone else may be doing something in your industry of choice, but what makes you stand out from the rest? This can look like offering competitive prices to your customers.
It has a steady stream of cash flow.
Whereas new business owners building their company from scratch may have a tighter budget and spend a lot of time searching for investors, buyers of a business can focus on improvements and upgrades and continue to generate sales through operations.
Part of the due diligence process in purchasing an existing business is ensuring that a business is actually making the money it claims to make.
A rule of thumb is to verify a business’s most recent 12-month revenue track record.
It has a reputable supply chain.
A reputable, professional supply chain is intertwined with a steady cash flow. If there’s a disruption in manufacturing, delay in shipment or product discontinuation, this can affect the nature of your cash flow and consumer trust.
A company’s already-existing supply chain can provide you with insight on how to improve operations and what products your customers may like.
Having a strong relationship with your supplier builds trust and security.
After all, a steady relationship with your supplier could mean the difference between hitting your monthly sales goal or losing money.
Conduct your due diligence.
Whatever route you choose to take in your entrepreneurial journey, it’s important to note that ensuring a vetted process is crucial to purchasing the business of your dreams.
If possible, hire a broker in your business industry to ensure a secure, vetted process. Binding contracts and legal documents needs a pair of fresh, professional eyes to ensure a seamless transition.
Additionally, there are various marketplaces where you can choose from various asset types like SaaS, apps, content sites and e-commerce stores.
Whatever asset of choice you choose, remember to think long term.
Ask yourself this question: How can I grow?
Once you have a concrete strategy in place, the rewards are endless and you can have fun while doing it.