One of the most common questions I get asked when people are looking to buy an online business is “What are the things I should be looking at or asking about before I buy?”
Well, of course, the complete answer is going to be different for each depending on the niche, history and business model. But, there are some basics that, with just a few adaptations, should be asked about any online business and maybe especially home based businesses.
This list is just the headlines and is by no means meant to be considered comprehensive, but it’s a good place to start and is probably best used as a catalyst to brainstorm a more comprehensive list once you’ve got the basics answered and decided that it’s going to be worth your time to dig deeper and do a proper Website Analysis prior to making an offer.
Knowing and understanding the segment or niche a business operates in is important for many obvious reasons but not least of all, so you can quickly identify the best avenues for growth and expansion
The products or services offered by a business are often seen as simply “this or that” but look at the business a little differently to see if there are opportunities to “stretch” the boundaries by expanding the range or how it’s being offered currently
If a seller say’s there’s no real competition, and you can’t find or identify any either, be very, very careful, in fact you may even want to drop this one and keep looking – no competition can sometimes means there is just no interest or if there is, that it’s not converting into buyers
The financial history of a business will help you identify trends and cycles as the business has grown and developed. By analyzing sales by month in relation to traffic history you should be able to identify any seasonal cycles but may even be able to identify specific results based on marketing events or campaigns
Verification Methods for Revenue & Expenses
Ask most accountants or bankers and they will say you absolutely must see the Tax Returns for a business in order to verify revenue and expenses. I typically ask for tax returns but mostly just to see what I’ll get back; it can be a good indicator of who you are working with and how well (or not) they have their accounting systems organized. You can always look at alternative methods of verification from 3rd parties such as merchant statements
There can often be multiple delivery options depending on the product or service being offered, each has its own pro’s and con’s but the trick is to find the right balance to maximize sales and minimize returns and of course the dreaded credit card chargeback
Managing inventory is an area where people often get into trouble. They start off small and it’s not too much effort to stay on top of things, but if your marketing is effective and your sales start to grow quickly, (as most of us hope they will) it can often take too much time to stop and implement a good inventory tracking system in retrospect
Sales drive every business and traffic drives sales, we all know that, but the beautiful thing about an online business is that you can “see” the quantity of traffic and from that, often also the quality of traffic coming to a site. By analyzing this information you can learn where the traffic arrives from, which pages it goes to and exactly where it converts (to a sale) within the site
Keywords and phrases are the “sign-posts” that direct traffic to a website. These are the words and phrases people use when they key in a search for something that brings them to your website, as opposed to your competitors
Marketing encompasses all attempts and methods a business employs to reach its target user or customer. Sometimes combining two or more methods within one campaign can be highly effective – maybe it starts with a video on the website, which invites a customer to receive further information by email
Want to See the FULL report?
Clearly this is just an overview of some of the main points you should cover and questions you should ask as you consider buying any online business. The full 5 page detailed report is too long to put here but it’s available to you absolutely FREE on request, just pop your name and email in the form below and I’ll get it right out to you.