A Millennial’s Guide to Buying a Turn-Key Ecommerce Shop
Many millennials have made an unrivaled success in starting an online business. It takes a lot of work to get an enterprise like that off the ground. First, the entrepreneur needs to find a market niche for the product.
Next, they have to set up a website, develop a customer database, and market the product relentlessly. The problem with this model is that it takes quite a long time to show a profit.
The alternative is to buy an existing online business, such as an eCommerce business lock, stock, and barrel. Much of the hard work is done before you arrive as the business is already established and running. This is referred to as a turn-key operation. However, there is as much risk in buying a company like this as there is in starting from scratch.
What you get when you buy an eCommerce store or any online business
When you buy an eCommerce business, it is about far more than buying a website, as it already has products, customers, and an operating model. This includes a pre-existing marketing plan or program that helps to find and follow up on leads, social media presence, and advertising campaigns.
There are also employees or virtual assistants that work for this online business, and you will become their new boss. These are the elements of any turnkey operation that you inherit after buying it.
The first decision you will need to make as its new owner is whether you intend to allow operations to continue as they are or make several changes to increase profitability. Most people advise that you spend some time becoming familiar with how the business runs before making significant shifts.
The decision to purchase on online business means taking a lot of the time consuming initial stages of creating a startup off the table. But that means you need to have the money upfront to pay for ownership.
To calculate a fair sale price, take the business’s annual profit and, at a minimum double it, or at a maximum triple it. Compare the total to the owner’s asking price to see if it is worth buying. Also consider issues like the company’s active email database, the volume of traffic on its website, and a valuable domain name for its website.
What to do before you buy a turnkey online operation
Capacitate yourself with the knowledge and skills any company owner needs before you purchase an online business by learning as much about business operations as possible. When you buy an eCommerce business, there is no time for learning curves and fixing mistakes as they happen.
Register for online learning about entrepreneurship. There are several to choose from if you shop around. Business ownership requires you to know and understand the basic functions of an organization and manage them. The same rules apply to buying an eCommerce store as those when acquiring a physical shop.
Criteria for buying an online business
Before you commit to buying the first option available, research is necessary. Any business you want to purchase should be showing consistent year-on-year growth and monthly revenues according to what high-quality online courses tell students. There should also be a sound marketing system already in place.
Putting all your eggs in one basket by buying a business that only sells one product should be regarded with caution as a diverse product range has a higher chance of success. People who enroll in well-known online courses that cover the necessary content thoroughly understand that a single product operation
Options for buying an eCommerce business
Whether you are planning on purchasing an enterprise in its entirety or investing in an eCommerce website without taking over will define your strategy. Explore your options before committing to a final decision. There are many online companies for sale, and making a hasty choice can backfire badly.
Research is essential as some business owners might inflate their figures to get a better price than what the company is worth. This is what makes doing due diligence worth it as you can save a lot of money or move on and invest elsewhere. Do not fall for the first advertisement for a business for sale before ensuring it is the right one for you and selling at a fair price.
How to find and buy an online business
First, decide whether you want to go about buying your eCommerce business alone, or if it would suit you better to involve an expert. Your approach will help determine the best way forward.
Look at Exchange Marketplace as this is a popular platform where most people selling online businesses advertise them. Search according to business market niches, age, sale price, and the industry the online enterprise serves.
Be as specific as possible in your search criteria, as this will give you a viable shortlist you can work from when weighing up your options. Do not assume that just because a business is listed for sale on a legitimate platform that research is not necessary.
The other alternative is engaging a broker’s services to find an online business that meets your set criteria. They have the market expertise to offer useful advice and ensure you do not get ripped off. Brokers can do in-depth research on potential eCommerce business sales to identify scammers as this is part of their service.
Finally, you could consider an eCommerce business auction. You might be able to buy a business at a highly competitive price on an auction platform as the owner is more than likely to accept the highest offer.
However, do not get involved in a bidding war that will make you pay more for a business than you can afford. Remember that auctions run over a limited time, and you might have to make a quick decision and place a bid without having a lot of time to research the business.