There are a few things that we learnt in the course of our search for the perfect profitable online business. While the internet has no shortage of advice and tips on what to look for when buying an ecommerce business, there are a few things that no one will tell you. We discovered some secrets that changed the way we looked at the opportunities presented to us. We will share with you some of these secrets in the hope that they’ll help you make a more informed choice.
We had read a lot of pieces that said that the numbers do not lie. While that is very correct, a profitable online business is more than just the numbers. It is not always about the amount of traffic pouring into the website, nor is it about the website’s aesthetics. We do not dispute that it is important to look at the numbers and trends cautiously and keenly. However, that is not all that you should look at when it comes to buying an online business.
Here is the real secret; the strategies. Do you know what makes one business more successful than the other? The strategies crafted and implemented differentiate winning businesses from failing ones. Business strategies are as important to the success of the business as the statistics, structures and processes.
Buying the right business is vital to sustaining its success. We discovered that it is very easy to get tempted by the amounts of profits a potential buy rakes in and end up making the wrong decision. Few months down the line when the business is not making as much as it used to, one will be tempted to think that the seller was a sham. However, the truth is that unless we buy a business that is right for our resources, passions, skill sets and experience, we are likely to run it down, no matter how profitable it is at the time of purchase.
We decided to come up with a list of things we thought the businesses we assess should have. We decided to be as specific as we possibly could in our quest to ensure that we got the right business to invest in. There has to be a balance between profitability, resources and strategies. Here are our top 5 non-negotiable rules of purchasing the right ecommerce business.
1. The business must have a built-in demand for its services and products. Trying to create demand is a costly affair
2. The products and services the business is selling online must have high profit margins
3. The business must be in an exclusive niche product wise or in a territory. This makes it easier to acquire and retain customers
4. The business must have a long term, viable business model that keeps the products or services competitive
5. The business must be driven by our strongest skill set – marketing. We avoid businesses that require skills that we have not honed yet
These rules significantly narrow down the opportunities available to us. Here is the best thing; you can create your list as you continue to search for the perfect business to buy. This is because you may discover certain business elements that were not initially in your radar and you need to adjust accordingly. But we’ll say this with certainty; having such a list is fundamental in getting the right business and growing it to unimaginable frontiers once you take over.
Here is the thing; we were honest to ourselves about the resources we had. We looked for a business that we could run with our skill set; we did not pretend to be who we were not. We were driven only by what we knew we would do best. We knew that if we got a business in our fields of expertise, we could turn it into the industry leader within a short time.
Staying focused on the goal was something we constantly reminded ourselves. The truth is that there are loads of profitable ecommerce businesses today. Some of those businesses are making very high profits. As such, it easily tempts us to stray from the goal. While the number of businesses available for sale today can overwhelm any potential buyer, we had our own hacks to keep us on track. One of the most effective tricks was to prepare a list of questions whose answers would help us sift through the opportunities. We also found it effective to search opportunities by the amount of profits they garnered as opposed to looking only at the asking price.
The idea of being a business owner is exciting especially if it has been a dream come true. However, don’t get caught up in the hype and forget why you want to invest in the business in the first place. We defined the amount we wanted as return on our investment before we started the search. We made up our minds that the business we settle for must give returns that we find satisfactory. After all, the aim of owning a business is making money.
Here is something we learnt pretty quickly; it is best to deal with ecommerce business owners than with brokers. While listings and other ecommerce websites sales channels and are a great place to help kick start the search, brokers will rarely tell you those little tricks that keep the business moving. Additionally, brokers will rarely show you the strategies that the business has employed over time in order to be as profitable as it now is. If you are like us and would want to have a more honest, eye opening conversation about the ecommerce business you intend to buy, talk to the owner. Dealing with the online business owner keeps the purchase process simple, faster and free of complications.
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