Rebecca Peres

The art of buying and selling online businesses

Photo creidt: Wouter on Unsplash, free images

There are endless opportunities to build wealth via the internet, but knowing where to start can be the daunting part.

Trading time for money is never the path to create true financial freedom. With the help of the internet, it’s now much easier to set up an online business that is an actual digital asset that generates income. Although, you still have to put in some work. Money won’t come rolling. in with just a snap of fingers.

An online business is completely based on the functionalities of the internet. It requires setting up various automated channels which include, but are not limited to; linking customers to the desired goods or services, setting up payment gateways, and delivery of goods or services.

It’s a digital age, so even physical or traditional businesses have some sort of online presence or online channels that help facilitate and accentuate the growth of the business. Even nations like Israel are raising global-thinking entrepreneurs that have turned to the internet in order to grow their customer base all over the world. 

With the emergence of Covid-19, a significant number of businesses had to find a way to make things work and hence had to move online. In Israeli alone, the B2C eCommerce market accounted for over $3 billion and is still expected to reach $5.5 billion in 2023.

Many speculated what would become of the office and the work environments. The American-Israeli company, Check Point Software Technologies, proposed a challenge to architects in 2021. They named it “The Challenge: Redesign Tomorrow’s Office” and pointed out how the Covid-19 pandemic has changed the way we work. It urged designers to “embrace the positive things that we have learned during this time, and we will redesign our offices and adapt them to the New Normal.” The first-place winners were Auerbach Halevy Architects, an Israeli architectural firm, whose concept proposed a “multi-functional hybrid space, which uses smart, flexible ‘islands’ which are capable in adapting and transforming”. They tackled the challenge by putting “emphasis on the integration and accessibility of advanced technology in the workspace”

As the Check Point Software Technologies challenge has proven, there are hardly any boundaries with an online business that can’t be easily overcome or navigated. Most online businesses operate on a robust business model that can be easily tweaked and adjusted to become more suited to the demand at hand.

Getting It Right

The hard truth about online entrepreneurship is that most people fail within a few years. Imagine wasting three years and not achieving the results you want. Of course, you’ll learn from failure, but here’s the thing— you don’t have to start a business from scratch. 

You can buy an existing online business that is already generating steady profit. Truth be told, buying an existing online business may even be a better option as compared to kickstarting it all by yourself. It just depends on the kind of niche you’re interested in pursuing, what skills you have, and how much liquid capital you have to invest.

Mike Swigunski — an online business expert who has helped build the world’s largest online business brokerage and marketplace to buy and sell businesses — as employee #4 at Empire Flippers, Mike suggests that when starting an online business, the first step is deciding whether to start the business from the ground up or to buy an existing online business.

Photo credit: Mike Swigunski, with permission

An online business can be likened to the digital version of a house or physical property because just like the worth of real estate grows over time, so does an online business. Hence, buying an online business can also lead to huge returns on investment (ROI) if properly managed.

A new online business takes some time before it becomes relatively profitable. However, an alternative is to buy an already existing established online business that has monthly returns. This would save the time and energy required in building a new online business.

Although, buying an online business is much more than buying a website. It’s the complete buying of an existing online business with products/services and customers, an email list, a strong social media presence, and working marketing methods that generate consistent sales — the entire package relating to any online business.

Swigunski, who has helped broker and successfully market more than $120M in online businesses, emphasizes that; “before buying any online business, it must have a track record of recent sales,  a profits and loss statement that’s been validated and verified. And after buying an online business, you may decide to let it run just like you got it, or you can tweak existing marketing methods to maximize profits even further.”

Buying and Selling an Online Business

When buying a business, entrepreneurs have the opportunity to buy into a business that has proven profitability, and whose products are already in high demand — which saves the stress of trial and error.

Swigunski gives his opinion on this in a simple statement; “The hardest part of having a successful business is often the hard work that is involved during the building process. There is often a lot of hard work and investment straight out of your pocket that is necessary before you can start reaping the benefits of your labor. When you buy an online business, you can avoid this altogether and start earning consistent income from day one.

Asides from this, industry experts can also buy an existing business to gain more market value in a niche they already exist in, which gives them bigger leverage and more competitive advantage.

There are numerous online businesses for sale, as well as a lot of places to buy them from too. Online marketplaces often feature several online businesses for sale, which is usually categorized by niche, revenue, web traffic, email lists, among others.

Swigunski — who has a personal portfolio of online businesses and websites, emphasizes that; “When buying an online business, the numbers need to be verified and this is done in several certain ways. I suggest the motto, “trust, but verify” and that is one of the big perks of utilizing an online business broker or expert when buying an internet-based asset. Most brokers spend weeks or months verifying the financial details of the seller before the buyer even gets access to seeing the business details.” 

Above all, you must perform your own due diligence and inspect the finances of the intended business carefully.

Paddling Through the Rough Times

Although it may seem like buying an online business is the faster and easiest route, there may still be some risks involved in buying an online business. For starters, the money required to buy the business is usually way higher as compared to just building the business from scratch. 

The normal listing price for an online business is 36-60x the monthly net profit. For example, if a business is earning $10,000 a month in profit, it could be valued at $360,000-$600,000. You might think that is a big difference, but a lot of factors determine what the business is actually worth. The primary impactors would be: age of the business, industry (fad or room for growth), recurring customers, growth trends, and much more. 

Overall, it’s essential to know what works for you. If starting a business from scratch is preferable, or more economical, go for it. On the other hand, if buying or selling an online business is the icing on your cake, dive in.

About the Author
Rebecca Peres is a journalist, software engineer, and currently resides in the Great White North.
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