How to Buy & Sell Online Business Profitably in 2019

Do you have businesses to sell online? Do you know you can sell an online business in multiples of its current monthly profit? But why you are selling is even more important than how much you want to sell. In fact, buyers may find the price attractive if they understand your purpose for selling. Some people can’t understand why someone would want to sell a profitable business.

And you will also need to find the best ways to sell an online business fast. Because once your interest is to sell, your commitment to the business also wanes. And if it takes longer to sale, the revenue may start to dip, and that would depreciate the value as well.

You will need the right platforms to sell faster. Some sites specialise in how to buy and sell online businesses. They will take the friction out of buying and selling your online business. The two best platforms to come to mind are Flippa and EmpireFlippers.

Although, you can also choose to sell on your own. It will do you much good if you let the experts handle it for you. They have the experience and the right connection with buyers or sellers. They can also help you get the most value from your sell. And buyers also trust them with their money than they would trust dealing directly with you.

Introduction

How to buy or sell an online business is not different from how to buy or sell an offline business. But you only need to understand how online businesses are valued and how to identify an excellent online business to buy. There are things to watch out for whether you are buying or selling. And most importantly if you are selling, you need to convince the buyer of your intention rather than just the value of the assets.

Also, Selling your online business may be a personal decision but that has to be revealed during the sale. Why do you want to sell? The buyer wants to know you are not selling because the business is crashing. Although, a buyer should conduct due diligence, but explaining sincerely why you are selling raises hope.

However, both sellers and buyers usually have different reasons, but the seller’s motivation is so important. Also, how the online business makes money is another information buyers what more clarity. Do you earn revenue from advertisements, or affiliate, or e-commerce? And a brief description of what the business does can help the buyer understand what they are paying to acquire.

Another critical information when selling your online businesses is how you get customers? Internet businesses value source of traffic more than revenue itself. The online sources of web traffic can determine the value of customers, the cost of acquiring customers, and potential growth.

How it Works

You have to start by choosing which one you want to do. Is it to buy or sell online business? How to buy or sell online business have their different consideration. If you’re going to sell an online business you focus would be to get the most money out of the sale. While the buyer is thinking of how to get the most value out of the transaction.

So, what the seller will be looking for is different from the buyer. The buyer will also be trying to avoid scammers. And most importantly not to buy a business that’s losing its trend already. But for the seller, the concerns are minimal. You only need to deal with finding the right platform to sell online business fast. And in some cases, you might be considerate about who buys the business if you want your legacy to continue after the sale.

One more issue may be a listing fee. Although, there shouldn’t be any fuss about that. But considering that some marketplaces charge listing fee monthly or for a limited period instead of throughout the selling period, makes it an issue.

Why People Sell Online Business

If you are wondering why anyone would sell a profitable online business, I can provide you with answers both from ordinary analytical life and from those who have sold businesses before or desires to sell online business. There may still be some crazy fellow who would want to rip off others with the sale of a dangerous business. But those are in the minority. However, that’s the reason it’s advisable to buy from verifiable sources or marketplaces.

However, one thing you must know is that most sellers may not divulge their real intention to sell because it might be private reasons. And most reasons to sell may actually be your bargaining advantage as a buyer. Here are some of the known reasons people sell online businesses. I will first make a list of the reasons and then explain some of the knotty issues around them.

1. Partner or investor issues
2. Better investment opportunities
3. Fear of uncertain future
4. Industry limits or changes
5. Big upfront cash out
6. Wane interest or burnout
7. Life events and changes

Partner or Investor Issues:

Sometimes businesses are sold for this reason. However, it’s important you trade carefully. Most business disputes don’t always end well. Although it can throw up some buyer advantage as well. You have to be sure you are dealing with all the parties involved or the party that can make the final decision. You should also get the parties involved to sign seller agreement to avoid anyone backing out after agreements to sell has been reached.

Better Investment Opportunities:

Here is one of the most popular reasons many sellers give. Although there is an issue with reason, because it may be a cover for the main reason. For example, many sellers may not want to disclose that their intention to sell online businesses it had to do with their private life. So, using better investment opportunities seem to cover it well for them.

However, you still need to find the right reason as well. Also, it may also be the reason. Right now, some experts specialize is starting online businesses and selling them for profit. They are continually moving on to better opportunities so to say. It might also be a seller who has several online companies and wants to sell one to reinvest the cash into other online businesses.

For example, most Amazon FBA businesses require huge stock investment. And as the company grows it needs more funds to keep the stock and meet growing customer demand. There are indeed better opportunities for selling, but you should find out about it as a buyer.

Fear of Uncertain Future:

This one may seem like a no-no for buyers. But it’s actually not about the kind of fear that should drive away an excellent buyer. Sometimes a seller no longer sees a future for continuing in the business. It may even be that the seller has done everything they could do regarding growing the business.

It’s up to you to evaluate the business properly before buying. Sometimes, the seller has limited knowledge and couldn’t do much to grow the business. But you can find at growth potentials that the seller didn’t know of. When you analyse what the seller has been doing, you will notice what needs to be done to grow the business further.

Industry Limits or Changes:

This looks at upcoming legislative limitations, tax increase or tariffs changes. Anything regulatory changes that can impact on the business. Sometimes these changes may be positively too. But anything is what checking out first before you commit to buy.

This may be a bit challenging, but you can have your lawyer conduct a legal review on the industry. Also, you can use Google trend. These days anything can be found on Google. Or you can find out from insiders in that industry for such legislative changes.

Big Upfront Cash-out:

I like this one so much. If you understand how to sell online business, you will know that it’s like a big payday. Most online companies sell for as much as 30 times their average one-year monthly profit. That’s a lot for some sellers if they are already making like five-figure income.

Getting an amount like that can be a motivation to sell online business. And many companies sell for just this reason. Especially those entrepreneur growing an online business just to sell them for profit. That’s what motivates them.

Wane Interest or Burnout:

This one happens a lot. It’s the most common actual reasons to sell online business. You can start a business now, and a few years down the line the enthusiasm is gone. You no longer feel as motivated as you were when you started.

However, a buyer should find out if the decline is due to seller lack of interest or distraction or other factors directly connected to the business. Anybody can say their reason for selling, but it’s up to you to find out how that benefits you or not. Why you should buy the business based on their purpose and what is the possibility for growth.

Life Events and Changes:

Things can change that affects the course of your life. And when that happens, it might cause you to want to sell online business you have been building for years. Some of these life events and changes include relocating to a new country, the birth of a new baby, marriage, divorce, religion, etcetera.

Although this can put the seller in a compromising position where they sell their online business to the fastest bidder and not for maximum gain. But be careful too and verify the reasons before settling for the deal.

Action Points to Sell Online Businesses

You will like to know if the reasons to sell online business is also legitimate, right? What if the reason is that the seller wants to move on to other projects, which may be the case for many sellers? But you should also find out the other projects that are taking the sellers interest away from the business.

However, your primary focus as a buyer should be to verify the business trend level, viability, untapped potentials, recoupment time, industry limits, expansion opportunities, etcetera.

And if you are the one selling your online business, you also need to have these facts so that if the buyer makes the enquiry, you can provide detailed information to show you understand the market and your industry. It gives buyers confidence that they are buying a well-managed business. Here are also what buyer and seller should be looking at to buy or sell online business.

Step One: What’s Your Business Worth

Find out the worth of your online business before making a decision to sell. In buying and selling, the value is what is exchanged. You have to identify the amount you want to trade in monetary terms. How much is it worth to you? But that is not to assume that you can just pick any figure as the value.

Any measure you place on the business must be justified by the current monthly revenue and profit margin. You should specify how your online business generates revenue. Do you use affiliate, Adsense or e-commerce? Your monetisation options would help the buyer understand how the income is generated.

Step Two: What Are The Assets Included in the Sale

Selling a business is selling its assets. So, you should specify these assets that you are transferring to the buyer. It’s important because the buyer may have a different idea of what they should get from the sale. But a clear itemization of what the buyer gets for this sale will avoid any form of rancour.

Also, online businesses may have assets that are not transferable. Like, Google Adsense account is not transferable under any circumstance. So, if you buy an online business that is monetised for Adsense, you will not be getting the Adsense account as well. But if the selling didn’t itemise what is being transferred after the sale may create sales disputes.

Step Three: What’s The Work or Skills Required in Daily Operation

For most online businesses, the work or skill required to run the business may determine the kind of buyer. So, this kind of information would make it easier for a buyer to decide. For example, If the website requires a frequent update, how was the seller doing it? What are you needed to do? How much of your time is needed for day to day operation?

And if it’s a specialised site, what are the skills needed? Do you have it? Can you train for it? The buyer should be informed of these skills. Buying a business, you don’t have the required expertise to operate may be a disaster.

Step Four: Provide Proof of Income

The most critical asset in selling a business is the proof of income. Unless the business is being sold for other reasons apart from revenue, the primary evidence any buyer require is income proof.

If there is no income proof, you may have a problem selling for the most value. Also, income proof shows how efficiently the business was managed. That’s why it’s advisable to To separate personal income from your online business.

If your receiving account is the same with your personal bank account, there may be problem convincing a buyer about the actual cost of running your business.

Step Five: Provide Proof of Online Traffic

The most significant assets of online businesses are the traffic potential. Sometimes a company may have low revenue but substantial online traffic. A buyer may see opportunities in that traffic they might monetise.

You have to provide online traffic proof to justify that the business is seeing enough visitors to explain the revenue. Also, the sources of your traffic are essential to help the buyer know what’s sustainable and what’s not.

Your Google analytical account has these details. And you should provide traffic proof for at least 12 months or based on buyer request. You may also have periods when traffic was low, it’s ideal to explain why and what you did to regain traffic loss.

Step Six: Show The Existing Opportunities and Risks

The buyer may not know your business too well. So, it’s recommended that you expose opportunities the new buyer can tap into when they buy your online business. That would help them see more value beyond what they are paying now to acquire it.

And also look at the possible risk. But this time, be sure to provide a way out. Not having a way out can discourage the buyer. But highlighting the dangers and showing their solutions would create the impression that you are transparent and honest. Because you didn’t only show the opportunities, you also showed the risk to watch out for.

Conclusion

One of the vital information you need when buying an online business is to stick with the market you know. Don’t buy a business because you are attracted to the amount of revenue it’s making monthly. You should be able to run the business that you buy. If not, there is no future guarantee of the income.

Also, it’s critical to buy only vetted business. Any successful online business must have verifiable data. But if you don’t know what to look out for, you may still not identify a great business deal when you see one.

To buy or sell online business is not that simple. You need to know more about the business you want to buy. Have a perfect knowledge of the niche, revenue model potential and traffic sources.

About Chinedu David

Chinedu David is a business consultant, marketer and strategist. My services include: conducting business feasibility study, packaging business plan, new and existing product market insertion, design, build and managing hotels and cooking Gas plants anywhere in Nigeria. You can reach me through any of these contacts: Call/Text/WhatsApp: 08139006120, 07087770518 or email: nedu@myblog.com.ng

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