For any entrepreneur looking to own and run their own company, buying an established online business is an attractive endeavor. Done correctly, buying an online business brings the possibility of incredible profits combined with a flexible and balanced work and life setup. In order to increase your chances of success, however, it is important to know what to look for when considering online businesses for sale.

In this article, we discuss:

• Why buy an online business
• Eight important steps to buy an online business
• Three helpful tips when buying an online business

Related Article: How to Get a Loan to Buy a Business

Why Buy an Online Business

Before we jump into how to buy an online business, let’s first explore why you might want to consider buying an online business in the first place. Among the many benefits of owning an online business, several stand out. These include:

• Profitability
• Flexibility
• Less start-up time
• Creative direction
• Exit opportunities

“Owning an online business can allow you to earn considerably more money than even the most lucrative professions.”

Profitability

Many people getting into online entrepreneurship are drawn to the potential for profit. Simply put, owning an online business can allow you to earn considerably more money than even the most lucrative professions. If you’re looking to replace your nine-to-five job while increasing your income, buying an online business might be the best way to go. 

On the flip side, many online entrepreneurs are simply looking to add a side hustle to their primary job’s income. In this case, you may not need to completely replace your job with an online business. Instead, you could hold onto your job and buy an online business as a second income stream. However, don’t be surprised if your online business grows to be profitable enough that you feel comfortable letting your traditional job go. 

Flexibility

Profitability and increased income are not the only life-changing benefits of owning and running an online business. Compared to a salaried job, owning an online business allows you a much greater degree of control over your time and flexibility in your lifestyle. This is the main draw for many entrepreneurs. 

Most online business owners work remotely. This allows you to work from home, wherever that may be. Or, you may choose to take your work on the road with you, traveling and working from around the world as a digital nomad. As you do this, you will realize there is a whole world of like-minded entrepreneurs out there focused on creating the ultimate work-life balance. 

Owning an online business also provides you with a much bigger say in choosing when you work. Instead of clocking in and out at the whims of your boss, you have the ability to decide when to get your work done. Whether you’re going for a surf in mid-morning or picking your kids up from school, this greater control allows you to be present for the moments in life that are important to you.

“Buying an established online company allows you to own and run a proven business model without the immense time, energy, and risk involved in starting a business from scratch.”

Less start-up time

Many entrepreneurs consider starting a business from scratch instead of buying an established one. While there are upsides to starting a new business, there are compelling advantages to buying an established one. 

When you start a business, it requires an immense amount of time, energy, and effort on your part. At the same time, new businesses have a significant risk of failure; all of the time and energy that you put into the business could well be for naught. 

Buying an established online company allows you to own and run a proven business model without the immense time, energy, and risk involved in starting a business from scratch. 

Creative direction

Owning and running your own business is a creative endeavor at its core. You are responsible for the direction of the company, opening up an exciting world of new possibilities. For many entrepreneurs, this creative authority is a significant draw compared to the potential monotony of a nine-to-five job. 

Exit opportunities

Lastly, owning and running a profitable business provides you with the opportunity to grow and sell it in the future for a significant profit. Many entrepreneurs buy a business, run and grow it for a few years, and sell it for a much higher price. For example, you could potentially buy a business for $500,000, grow it for three years, and sell it for $1,500,000. 

Combined with the income potential while you run the business, these increased profits at the time of sale make buying a business a truly exciting endeavor. 

“Many entrepreneurs buy a business, run and grow it for a few years, and sell it for a much higher price.”

8 Important Steps to Buy an Online Business

If you are considering buying an online business, it is important to have a solid understanding of the key steps you will need to navigate in order to complete the acquisition successfully. 

Establish your goals

For starters, it is critical to establish your goals. Why are you buying a business? Do you want to create a side hustle, replace your primary income, or buy a business to grow and sell in a couple of years? How much income do you need or want to take from the business? How much are you willing to spend on the acquisition?

Establishing clear goals helps you gain clarity on the types of businesses that you can and should consider purchasing. 

Understand your financing

Next, get clear on how you plan to finance the deal. Do you have significant cash available to make the purchase outright? Can you consider an SBA loan to finance the acquisition? Or, perhaps you could borrow money from family or friends to make your dream a reality.

Understanding your financing will allow you to set a clear budget and narrow your search to businesses that meet that budget. 

Identify opportunities

Once you have established your goals and gotten clarity on your financing, it is time to begin your search. Look through business listing sites, work with a business broker, and explore your professional network for any attractive opportunities. Once you find prospects, do your research to vet each one and narrow your selection down to the businesses that meet your criteria. 

“Understanding your financing will allow you to set a clear budget and narrow your search to businesses that meet that budget.”

Make an offer and sign a letter of intent

Once you find the right business, it is time to make an offer to the seller. If they accept, you sign a letter of intent. While this is not a legally binding contract, it does signal a very serious intent on both of your parts to move forward with the deal, pending certain criteria being met. 

Negotiate with the seller

Throughout the transaction process, you will need to negotiate specific deal terms with the seller. As new information comes to light, parts of the agreement may need to be renegotiated. For your part, be honest and up front and negotiate in good faith with the seller. Doing so will create the trust you need to work toward a truly successful deal. 

Navigate due diligence

Due diligence is a critical stage of the acquisition process where you fully examine the business to ensure that it performs as claimed by the seller. During due diligence, you comb through all business records and ask the seller key questions to evaluate its performance. 

It is your last, best chance to catch any issues with the business before you finalize the deal. If any issues come up, you can back out of the deal or renegotiate the terms with the seller. 

Sign the asset purchase agreement

Once due diligence is completed to your satisfaction, you and the seller draft the final agreement, called an asset purchase agreement. Once the agreement is signed, the deal is final.

Closing and transitioning

Lastly, you and the seller transfer the agreed-upon funds and business assets to close the deal, often using an escrow account. Once closing is complete, you enter into a transition period where the seller helps you get up to speed on owning and running the business. The terms of the transition period should be clearly spelled out in the asset purchase agreement. 

“Given the complexities of buying a business, many entrepreneurs find it helpful to work with a business Advisor throughout the acquisition process.”

3 Helpful Tips when Buying an Online Business

Buying a business and running it successfully can be a complex process. To help you succeed, we have provided three helpful tips to consider as you move forward. 

Choose a business that will sustain your interest

Buying and running a business will require time and effort on your part. If you are in it for the long haul, it is important to consider how you will sustain the motivation needed to run the company successfully. 

Remember, you will not have someone looking over your shoulder or reminding you to stay on top of things. It is up to you to determine what needs to be done and ensure that it gets done in a timely manner. 

Consider what motivates you and choose a business that you feel can sustain your interest. For many owners, it is helpful to buy a business that they have some natural interest in. For example, if you are passionate about gardening, it may make sense to buy a gardening-based company. 

Consider your expertise

Next, consider what your expertise is and look for businesses that would benefit from your specific skill set. For example, if you have extensive experience building out marketing operations, you may benefit from buying a business that has a solid foundation but lacks a clear marketing plan. By buying a company that lacks what you have, you increase your chances of driving growth after acquisition. 

Work with a business Advisor

Given the complexities of buying a business, many entrepreneurs find it helpful to work with a business Advisor throughout the acquisition process. From choosing the right business to navigating due diligence and negotiating deal terms, an Advisor will be with you every step of the way to ensure your success.