How to Buy and Sell Websitesby Garit Boothe Content Marketing Expert
Digital assets are fueling a huge part of the economy. Here’s how anyone can get in the game.
Study online marketplaces and learn about businesses for sale
The prospect of buying an online business is overwhelming, but it could truly prove to be the best use of your time and money. If you want to own an online business, then you'll have two basic options: starting from scratch, or buying an already established online business.
When you start from scratch, you incur all of the responsibilities that go along with launching, and then you'll need to learn over time if your venture is successful. But when you purchase an already-established business, then you're walking into a turn-key opportunity.
You can purchase an already-established opportunity on highly-trusted sites such as Empire Flippers, and FE International. These are platforms that offer the businesses for sale, along with stats such as annual and monthly revenue, and the net profit of the business for sale.
Look for businesses in industries you know about
Now that you know of a couple of highly-legitimate sources for finding digital businesses for sale, it's time for you to come up with a strategy. You'll need to figure out what type of business you'd like to purchase.
Typically, businesses are listed by business model and by industry niche. Examples of business models include affiliate, merchandise, Amazon FBA, and drop shipping. Examples of industry niches include health and fitness, tech, and ecommerce.
It's best for you to select an industry that you're knowledgeable or passionate about. It’s even better if you have experience in it. You'll find yourself generating more revenue without wasting time learning about a new industry niche.
Make sure that you have good funding
Next, it's time for you to ensure that you have a great source of funding. Let's be clear: A successful digital business isn't cheap! If you check out the prices on the aforementioned platforms, then you'll quickly see that it's common for many of the asking prices to start in the six-figure range, and many are being offered for millions of dollars.
Common sources of funding include:
Business lines of credit
Business credit cards
Family and friends
Buyer retirement accounts
SBA loans and other types of traditional bank loans are difficult to qualify for because the owner has to meet difficult personal and business credit requirements. But the low interest rates on these loans make them a very attractive source of funding. The same is true for business lines of credit.
Business credit cards do come with high interest rates, but they are very easy to obtain. Interestingly, 22% of business owners say that business credit cards are their top resource for acquiring funds. Many credit cards come with an introductory offer of 0% interest for 12+ months. The smart play here is to sign up for multiple 0% interest credit cards at the same time, which can result in as much as $10,000-$30,000 in business acquisition funding.
Seller financing is where the seller agrees to accept a loan with regular payments directly from the buyer. This has to be negotiated, but it’s not uncommon. Sellers typically want at least some cash upfront, and that down payment often looks like 25-50% of the total purchase price.
Finally, family and friends and one’s own resources are very common sources to draw on for funding. Many people don’t know that 401(k) retirement accounts can be borrowed against to fund real estate or business acquisitions.
For someone just starting out, usually a combination of the above financing sources allows them to get into their first deal.
Make Sure the Business is Growing
You don’t want to buy a dying business. That would be very risky and require way too much work on your end to turn it around. There’s a chance that you may not be successful in turning around the declining business.
The same thing goes for businesses with inconsistent revenue. Even if the revenue is trending upwards, if the sources of income are not consistent, that could create huge stress and cash flow problems for the new owner.
The best and safest course of action is to buy a business that has steady, increasing income. That way you’re walking into an already successful business, and your only problem or risk is to not mess it up.
Work with reputable brokers
Finally, don't take a risk on handing over large sums of money to just anyone who promises to sell you their business. With so much at stake, you should only work with reputable brokers. Reputable brokers have the necessary legal contracts and financial processes you'll need to ensure a safe, legitimate transaction.
Businesses are bought and sold every day without brokers, but those transactions are typically done by veteran business owners with experience buying and selling businesses. It’s much safer for the new business buyer to get professional help.
Buying an already-established digital business could save you years in trial and error. It’s not without obstacles and risks, but buying a business can be the right move for many new entrepreneurs.
Created on Jan 25th 2020 09:44. Viewed 237 times.