How to Buy an Online Business
You have your heart and mind set on owning an online business, and we’re here to help you get there. What you may not be aware of is that you’ve already taken the first step… you’ve made the decision to buy an online business rather than starting one from scratch. See, you’re well on your way!
Understanding the process of how to buy an online business beforehand will put you in a better position to succeed. So let’s get started…
Put in the Prep Work
Arm yourself with all the self-knowledge you can prior to putting yourself out there. This can take some time. First things first, what are your interests and passions? Ideally, you want to look for an online business in an industry that fits your background and will hold your interests for many years to come.
Next, you’ll need to know your price range, which is directly related to what size online business you’ll be purchasing. Find out how much capital you will be able to obtain and where it will come from. Utilize every resource at your disposal to get an understanding of how financing works and how you can go about getting it. Don’t move beyond this step until you feel you have a good grasp of the ins and outs of financing.
Start Your Search
Now that you have a specific industry and price range in mind, it’s time to get specific. Search all over for businesses for sale. There are plenty of resources available online:
— There are several reputable online marketplaces, much like ours, that list businesses by easily searchable categories (industry, state, price, etc.).
— Online auctions are another option to consider. They have similar listings to online marketplaces, the difference being you then bid on business you are interested in. Much like eBay, there is a chance you could get engaged in a bidding war with another interested buyer, putting you out of your price range.
— There is always the option of working with a business broker, who will handle the work of vetting the websites for you and can let you know which ones would be the best option for you based on the amount of money you have available to spend. The benefit of brokers is they only get paid when the sale goes through, so they have an interest in helping you find the best possible online business. If you go through a broker though, make sure that you choose someone trusted in the field.
Perform Due Dilligence
At this point in the process, you should have it narrowed down to a handful of businesses you’re considering buying. Now it’s time to perform due diligence and do a careful evaluation of each one. Do not skip any steps during this process. Be critical and thorough. Know the financials inside and out, meet with the sellers, and customers, if possible. Be willing to sign a Non-Disclosure Agreement (NDA). Get to know the business inside and out. Again, let this stage run its course. Time is on your side at this point.
It’s Time to Put in an Offer
If you find a business that checks out and you like what you see, it’s time to put in an offer. But first, our advice would be to enlist the services of a contract lawyer who has business sale experience. They can help you out with structuring any documentation and can handle the back and forth of negotiations.
Secure Financing and Close the Purchase
Now that you have an agreed asking price, you know how much financing you need to come up with, whether it’s self-financing, seller financing, peer-to-peer lending or from a more traditional lender. In rare cases, business owners will relinquish full control of their business and take a percentage of the value in return for a share in company profits.
At this point, all that’s left is to do is sign the purchase agreement and satisfy the closing terms. Congratulations, you are now the proud owner of an online business!