This is part 3 of our “Buying An Online Business” series of articles.
Buy Shopify Stores – The Personnel Audit
It is no different when buying an online business and when buying an offline business, you need to do a personnel audit.
Businesses are made up of relationships with suppliers, staff, customers and owners. So it is important to understand the dynamic between them.
Having reliable and cost-effective suppliers can be a big advantage for any business. Having close working relationships and long term contracts with such responsible external partners is a big plus for the potential buyer.
Evaluate the terms of agreement with each supplier. Take note especially of terms pertaining to cancellation, refunds, reorder sizes, returns, quantities of SKUs and shipping.
Other external partner agreements to consider are marketing contracts with digital marketing agencies.
If the marketing has been done well, traffic is targeted and sales conversions are high, longer term agreements would be pros to the buyer.
You as a buyer will have certainty with regards to your marketing costs.
It is the same with any freelancers hired by the business. Understand their wages, their responsibilities and how they function within the framework of the business.
Buy Internet Business
How many staff does the online business employ? What are their wages? Where are they based? Are they replaceable? What are their roles and responsibilities?
You’d want to ensure that their duties and processes are documented. This will facilitate handover processes should anyone of them retire or need to be replaced.
If the web store had essential staff with long term contracts, that may be advantageous to you.
Otherwise, you will have to decide whether you want to keep the current team or replace them with your own trusted people.
Be aware of potential legal ramifications of relieving the team currently in place, as well as the training cost associated with new hires.
Finally, assess the owner. Understand his reason for selling and willingness to help you with the transition.
Buying an online business can cost substantial amounts of money. You would want the current owner to be trustworthy.
would also want to ask whether he is open to seller financing. This could substantially
lower your initial outlay.
If the owner is presently indispensible and his duties are entrenched in the daily operations, you might want to include a clause in your purchase agreement that ties him to a longer handover period.
Buy Ecommerce Business – Advantages
Buying a business is generally considered less risky than starting your own business. This is especially true when the business you are considering is well-managed, profitable and asking for a good price. Consider these advantages:
- The difficult & tedious start-up work has already been completed. It is a proven model. Business plans and procedures have been refined and profits are reflected.
- For new business owners, having experience is a great plus. Existing managers and staff will have experience and inputs they can share.
- The market for your service or product has already been researched and established. You save time getting a foothold in your chosen sector.
- You immediately acquire existing customers, goodwill, suppliers, employees, contacts, plant, equipment and stock. These are already done for you networks and logistics.
- Buying an established business means immediate cash flow. You can focus on scaling the business and getting a larger market share.
- With a financial history, the business gives you an idea of what to expect. It also makes it easier to attract investors, secure loans and alternate funding.
Buy And Sell Companies Online
Buying an online business or considering an online business for sale can be tiring and expensive. That said, it can be an exciting, lucrative and safer entrepreneurial route.
Instead of starting from scratch and slowly working your way up, you can take advantage of existing established businesses with proven track records and strong foundations.
By investing in due diligence, you can attain higher rewards in a shorter time frame safely.