This is part 2 of our “Buying An Online Business” series of articles. In trying to uncover the best online business for sale, it explores cost analysis, technical and marketing audits.
Buying An Online Business – Cost Analysis
Cost analysis involves studying the cost of running the business as well as selling and delivering the product/service to customers. They include cost of inventory, production, marketing, shipping, and refunds.
They are a vital metric that help you calculate the profitability as well as the required cash flow of the online business.
Consider cost of acquiring each item, minimum order requirements, shipping of average sale, warehousing and inventory.
Identify areas where you can lower the costs via your own network, research and connections.
Any online business can expect returns and chargebacks. Top retailers have low single digit return rates. Discuss with the owner how he would lower the return rate if he could. A genuine seller will advise buyers how to improve the business and make it more profitable.
Buying an Existing Business Checklist
While online businesses rely heavily on technology, it is safe to say that there is a human team running the show in the background.
It is important to know what technical skills are required to run the operations. Firstly figure out what kind of software the store runs on.
Are you or your intended team familiar with the technical skills to utilise it? What is the software’s learning curve like for newbies?
Ecommerce software like WooCommerce is the core of an online store. It is imperative that you know what Ecommerce software the website uses.
If it is one that you are unfamiliar with, weigh the cost of changing it to a familiar one and learning how to use the existing platform.
A good ecommerce software should integrate with payment processors, customer management systems and fulfilment processors.
Marketing software are crucial to bringing in customers to the online business. They include email marketing software, customer support tools, chatbots, content management systems, social media marketing tools. Again, evaluate them by software cost, special requirements and learning curve.
You’ll be able to tell when the domain was created. Go through domain history. You will be able to see whether it was used for nefarious purposes. Also check whether the domain has been blacklisted by search engines and mail servers.
Online Business For Sale – Marketing Audit
Buying an online business with an existing store provides you with a strong marketing foundation.
This gives you a jumpstart to scaling growth rather than tediously starting from scratch. Even a failing store would have some search engine traffic and social media following.
SEO is the number 1 method of growing an organic following. It is a huge attraction for buyers of online businesses. A website with a strong SEO foundation can command a high price due to the fact that customers are already visiting it and will continue to do so. Using Google Web
It’s much easier to get organic traffic if the store already has a strong SEO foundation. Using tools like Google Webmaster, you will be able to get deep insight into the boutique’s traffic, backlinks, keywords and ranking details.
Keep an eye out for any lucrative keywords the site already ranks for. If you can push the store’s ranking to the top three results, you’d get a lot more organic sales.
Buy Ecommerce Business – Additional Audit
A social media audit should consider the number of subscribers/fans/followers on social media networks, the frequency of posts, your ability to create top performing content and whether social media marketing has been fully optimised for results.
The savvy social media marketer will be able to quickly scale results when a firm foundation with credible data has already been established.
Email and referrals are the two biggest sources of traffic to online stores. Consider the size of email subscribers list, open & click through rates and email content.
Evaluate the possible expansion of the referral network, the sustainability of referral traffic, whether the partnerships are long term?
Paid Advertising Campaigns you should also request for paid campaign data on platforms like Facebook and Google Adwords. Assess the cost effectiveness of paid campaigns.
Business consultancies like Blazing Conversions, can audit & evaluate the online business for sale that you might be considering.