Building a business from the ground up appeals to many entrepreneurs. The excitement of bringing a business to life is something a lot of them feed on, to fuel their passion and power their progress. But just as it is offline, starting an online business doesn’t necessarily mean starting from scratch.
You can buy an existing, thriving online business, or a new store that’s set up and ready to go, or a ‘fixer-upper’ that needs some work to reach its full potential. Either way, you’ll skip the startup headaches and be that much closer to profitability. The website may also come with a great start on traffic, which can make a huge difference in the time it takes for you to bring visitors to a new website. It could bring existing customers with it as well. Social media accounts and mailing lists might be part of the package too.
How to Evaluate an Existing Online Business
To determine if an online business is a wise investment, you’ll have to perform the same due diligence as you would for purchasing an offline business.
Some standard pre-purchase questions you might ask are:
- Is it viable and feasible for you?
- Is there an existing business license, trademark or patent?
- Is the logo and branding in place?
- Is it profitable? How much does it earn annually? Is it growing?
- What expenses do they have? What is the cost of customer acquisition?
- Is there any debt or overdue taxes?
- What’s included? Inventory, contacts, apps, and so on.
- What kind of reviews does it have? Does it have a BBB rating?
- Do you have ideas to improve and grow the business?
For more information about buying a business in general, check out this Comprehensive Guide to Buying a Business in Canada.
Additionally, some questions and concerns may be unique to online businesses:
- What online business & revenue model is in play? For example, is it ecommerce with drop-shipped fulfillment? A blog with affiliate marketing & collaboration revenue?
- How long has the website been online?
- Does it come with content and photos?
- How much traffic does the website get? What is their domain authority? How does it rank in major search engines? Tools like SEMRush are specifically designed for search-related competitive intelligence and analysis.
- How many backlinks (links from other websites) does the website have? Are they reputable sites?
- Does it come with social media accounts and/or a mailing list?
- Is any hardware, software or apps included? Is any of it proprietary or custom-designed?
Professionals who should be involved with your purchasing decision are an accountant, a lawyer and possibly a reputable broker or escrow service. Escrow services help protect both buyer and seller in online transactions, such as the sale or purchase of a website or domain name. Payment is held by the escrow company until all terms have been met by both parties. I recommend that all deals go through escrow.
Where can I buy an existing online business?
There are a number of marketplaces out there that may have the right online business for sale. Some list all types of businesses, including functioning websites. Others specialize in digital ventures. Many already include some of the business information that you need to know, such as monthly revenue.
Empire Flippers Online Businesses for Sale promises profitable online businesses for sale by trustworthy sellers.
Flippa is a popular place to buy an online business, become an acquisition entrepreneur, or just invest in digital real estate.
You can also make an offer on any website business that interests you. With a little practice, you’ll learn to spot the online entrepreneurs who are more likely to sell, just like the professionals do. For example, Practical Ecommerce reports that Amazon Marketplace Sellers Are Attractive Acquisition Targets.
“Buyouts of Amazon marketplace sellers are booming,” writes Marcia Kaplan. “Aggregators are scooping up successful small sellers and creating large and lucrative portfolio companies. The acquisitions are mostly fueled by angel, venture capital, and private equity funding. Aggregators pay anywhere from hundreds of thousands of dollars to the low millions.”
You may not find the perfect online business for you, or you might decide that it’s just as easy to create your own. It’s worth it to see what’s available and then decide if purchasing an online business is a viable idea.
Have you ever purchased or sold an online business? Are you looking for one? Please share your experience & questions below or join us in our Online Business Canada Facebook group!
You may also be interested in reading:
5 Quick and Easy Online Businesses to Start in Canada
Online Business Basics: Business Models
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Melody McKinnon's formal education is in business management, which she enhanced with more than 60 certifications revolving around business, marketing, health, general sciences and writing. In over 20 years of working online, she has owned or managed both educational and eCommerce websites.
Melody has worked with many businesses & brands in a multitude of capacities. She can often be found on CanadiansInternet.com, CanadianFamily.net and AllNaturalPetCare.com, as well as other quality digital publications. Her content has earned reference links from highly-respected websites, magazines and university textbooks.
It’s so hard to build it up that has me thinking I’d like to go the buy route. What questions do you guys ask sellers to make sure it’s worth buying? Like about their following or reach?
buying any business is scary but online i’ve always been nervous about scams. i didn’t know you could use a third party to make it safer. brilliant!! now i’m excited to see what I can find and build up with a site that’s a proven concept.