Introduction
It’s a common problem - you’re an entrepreneur with a burning desire for success. Yet you can’t seem to get your business ideas off the ground, or scale them to the size you want.
Many entrepreneurs have realized that buying an established online business is often the smoothest path to running their own successful company. By buying existing digital businesses, you can gain access to companies that are already established and ready for the next level of growth.
When you start an internet business from the ground up, it can be a difficult process: time-consuming, overwhelming, and highly risky. To avoid these potential dangers, a smart alternative is to buy an established digital business.
In this blog post, we'll take a look at why purchasing an already established online business is often the better choice for savvy entrepreneurs who want to hit the ground running with minimal risk and time investment. From fully developed products and services to ready-made customer bases, learn why investing in an established online presence can provide powerful opportunities for long-term success.
Should I Buy an Established Digital Business? Or Start My Own from Scratch?
If you're an entrepreneur looking into running your own business, you’re probably thinking of building a business from the ground up. Yet, have you ever considered buying an existing online business? By buying a profitable online business that’s for sale, you get instant access to loyal customers, consistent revenue streams, and established business processes. While each option has its own advantages, there are distinct benefits to buying an established online business. We explore a few below:
1. Leapfrog the business-building stage
Investing in an established digital business can be a great way to jumpstart your entrepreneurial journey and see the rewards of your efforts much sooner than if you had started from scratch. Buying an already existing web business means instead of having to develop something new, you can adopt and further optimize an established process that has already proven to be successful.
2. Reduce your risk
Many entrepreneurs and small business owners rarely consider growing their business through acquisition. Yet, buying an existing digital business can be less risky for an entrepreneur than starting a new business or product/service line from scratch. An established digital business has already gone through the initial stages of development, such as creating a brand, building a customer and supplier base, and developing products or services. It likely already has a track record of performance, including revenue and profits, which provides a level of predictability and reduces uncertainty.
You, as the new owner, can leverage the existing infrastructure and analyze existing data to identify trends and make better informed decisions about how to improve the business. This should save you the time and effort required to test new markets or product/service lines, fast-tracking your path to earning a return on investment.
3. Resources are already available
With a pre-existing business, the resources and infrastructure are already in place. This means that you don’t need to waste time attempting to build the back end of your business from the ground up. You can build from what is already in place.
When you buy a digital business, you also can review the product or service development plans and roadmaps they have in place. Being able to choose a digital business with a plan that you believe sets it up for success, or is adaptable enough to suit your goals for the business saves you significant time and effort. Someone else has already done the majority of the trial and error for you.
4. Leverage past sales & marketing data
The sales data of the online business you plan to buy is integral in understanding its historical performance and future potential. You’ll gain immediate insight into customer personas and potentially even past tactics they’ve tried which have both succeeded and failed.
Marketing data offers you a wealth of information regarding how prospective customers have responded to different marketing tactics. By buying an existing online business, you’ll get access to potentially years of data from trialling different strategies from day one. This will provide valuable insight into tactics that resonated with customers and those that didn’t, how to best penetrate target markets, access to industry-specific contacts, and how to best leverage customer loyalty.
5. Brand-building phase: Done
By buying an established web business, you know the brand-building phase has already been set in motion. You only need to continue building on established customer trust and reputation with customers and leads already familiar with the brand.
6. Marketing materials ready
Another advantage of buying an existing digital business is that they likely already have existing marketing plans and collateral. These can range from professionally designed and managed websites, blogs, and social media accounts to a library of content such as images, articles and email newsletters already prepared for you and your customers. Having these ready-made materials presents a consistent and coherent brand that won't need to be re-established, ensuring customers continue to receive consistent and clear messaging about your business and its purpose.
7. Established supplier relationships
The strength of existing supplier relationships should not be overlooked when buying an established online business. Taking on an internet business where relationships are already in place will allow you to benefit immediately from access to inventory, established ways of working and historical data. It’s much easier to negotiate favorable terms with existing than new network partners.
8. Live website and established SEO
When you buy an established online business, you are instantly getting access to a website that is already live. This saves you both time and money as it eliminates the need to build a functional website from scratch. Instead, you’re free to focus on business growth or expansion plans. The house is already in order, you can just focus on renovations.
A well-optimized website can also provide numerous benefits for online businesses, regardless of the platform used, such as Shopify, Squarespace, or WooCommerce.
Firstly, it means a better user experience, which can lead to increased engagement, longer session times, and a higher likelihood of converting visitors into customers. A professional and well-designed website can instill confidence in the business, increasing the likelihood that customers will make a purchase.
Secondly, this also means it’s likely to have already started working on its SEO strategy, which means it’s likely to rank higher on search engines, and make it easier for new customers to find their way to you. By buying a website with a track record of attracting organic traffic, you gain predictability and reduce uncertainty.
9. You know your customers
Access to key customer data can be incredibly valuable when buying an established online business. This data can provide insight into the behaviors and preferences of the business's existing customer base, allowing you, the new owner, to make informed decisions about how to market and grow the business. With this information, you can tailor their approach to develop new products or services that align with customer needs, and create more effective marketing campaigns.
Additionally, customer data can be used to analyze trends and identify areas for improvement, such as optimizing the user experience on the website or streamlining the checkout process. Overall, access to an existing wealth of customer knowledge can provide a powerful foundation for the future success of an online business.
10. Your customers know you
A solid customer base provides a foundation for the business and can be leveraged for future growth opportunities. By buying an existing business, you immediately gain access to an established customer base and can build upon it with their own marketing strategies. In contrast, building a customer base from scratch can be challenging and time-consuming. Furthermore, an established customer base provides a level of predictability for future revenue streams, making it easier to project financial performance and secure future funding, if required.
11. Positive customer reviews
Did you know that 49% of customers only buy from businesses they trust online? By reading what other customers have to say, aside from you, potential buyers are also provided with valuable insight into the business and its operations.
The quickest way to build that trust is by having good feedback and positive reviews about your business. These can prove invaluable to its growth, giving your company credibility, and generating organic sales through referrals.
When exploring a digital business marketplace for your options of established online businesses to buy, keep an eye on its existing customer-provided ratings and reviews. You’d be surprised by how much customer reviews mean for an online business’ long term viability!
12. Proven business model
A proven business model is one that has already demonstrated its ability to generate revenue and profits consistently over time. By buying an online business with a proven business model, you can leverage the existing infrastructure and established customer base, which can save time and resources compared to starting a new business from scratch.
Instead of spending your time working out the best way to start making sales, you can focus on building upon the existing business model by implementing new marketing strategies, introducing new products or services, or by expanding into new markets.
Ready to Fast-track your ROI?
Starting your own business can be exciting. However the path to success is often a long journey that involves a lot of hard work. While the cost of buying an online business may seem more than you’re willing to invest upfront, compare it to other costs traditionally involved in starting your own web business: hiring and training staff, testing different marketing strategies, designing your website and/or Shopify store, learning how to best set up your site to succeed within the algorithms….
Often, buying and maintaining an already profitable online business ends up being more time and cost-efficient for entrepreneurs. This means you can focus on optimizing an existing digital business with your specific skills and knowledge. By leveraging your abilities on an existing online business, you’re likely to see a faster return on investment.
Where to Find Established Online Businesses?
Researching your options is the first step in your business buying journey. Whether you’re looking to buy or sell established online businesses, aside from determining your needs and goals, it is important to ensure that you’re looking for your next web business on trusted marketplaces.
Hatchit, a global deal directory, allows you to search and filter across over 30 digital marketplaces and brokerage sites, on one platform.
What is a Business Marketplace?
Marketplace platforms usually feature a variety of businesses for sale, ranging from niches of e-commerce sites to content-driven blogs. Some popular platforms include:
Entrepreneur Networks
Another way to find established online businesses that are for sale is to network with other entrepreneurs in your industry or attend online business conferences and events. Don’t forget to do your due diligence before committing to a purchase though!
Buy-side Brokerages
Buy-side brokerages provide significant value in helping to match potential buyers and sellers. These platforms offer a marketplace where prospective buyers can browse and search for online businesses that match their interests and investment criteria.
By using a buy-side broker, buyers can get guidance in the search process as well as access to a wider range of online businesses for sale than they might find through traditional channels. This can increase the chances of finding the right business to purchase.
Buy-side brokerages also provide a range of services to help facilitate the buying process, such as due diligence, financial analysis, and transaction support. This can save buyers time and resources compared to conducting the process independently.
Additionally, buy-side brokerages often provide financing options for buyers who may not have the full amount of cash required to purchase a business outright. This can provide you with access to capital and make it easier to buy and start running your own online business.
What are the Risks of Buying an Existing Business?
It’s important to know that whether you buy an established online business or start one from scratch, there are always risks involved.
1. Accurate valuation
One of the biggest challenges when it comes to buying an existing digital business is accurately valuing the business. Business valuation is a complex process that involves assessing various factors, such as the business's financial performance, industry trends, market demand, and growth potential. It can be difficult to obtain accurate and reliable information about the business, particularly if the current owner is not forthcoming with details or if the business lacks detailed financial records.
When considering buying an online business, you need to ensure that its assets, liabilities, and legal obligations are properly evaluated and disclosed before the purchase. This requires a thorough due diligence process to identify any potential issues or liabilities that could impact the value of the business or pose a risk to the new owner. You also need to consider its sources of revenue - over-reliance on a single website traffic source, specific season or service, or revenue derived from questionable marketing practices may increase the risk of unsustainable long term revenue.
2. Reliance on current owner
Many online businesses are small and may be heavily reliant on the current owner's knowledge, expertise, and relationships. If the owner leaves the business or is unable to transfer their knowledge effectively to you, the business may suffer.
Make sure all processes are documented and you fully understand how a business handover will work.
3. Unclear Branding
Make sure you’re comfortable with the current branding, or have a clear plan to change or update it. Unclear or inconsistent branding can create confusion among customers, leading to decreased trust and sales. Additionally, rebranding an established business can be a challenging and expensive process that may require a significant investment of time and resources.
The potential roadblocks concerning unclear branding can be countered by thoroughly doing research as to whether if it can effectively be built on for success.
4. High Competition
Online businesses are particularly vulnerable to competition as the barriers to entry are relatively low, and there may be many competitors offering similar products or services. If the business you want to acquire is in a highly competitive market, chances are, you may struggle to attract new customers and differentiate your business from the competitors.
Buying an established online business means taking on its existing competition. While it may be profitable now, you need to be aware of your competitive environment and be responsive to changing trends and pricing.
5. Changes in technology or regulations
The online landscape is constantly evolving, and new technologies or regulatory changes can disrupt established business models. You need to be prepared to adapt and change quickly to remain competitive.
Further, web-based businesses may be vulnerable to fraud or cybersecurity breaches, which can damage the business's reputation, customer trust, and financial performance.
6. Overleveraging
Overleveraging occurs when a buyer uses too much borrowed money to acquire a business, and the resulting debt burden becomes unmanageable. Online businesses, in particular, are susceptible to overleveraging because they often have lower startup costs than traditional brick-and-mortar businesses, and you as a buyer may be tempted to take on more debt to fund the acquisition.
Overleveraging can also lead to a lack of flexibility in managing the business, as this may force you to make decisions that prioritize debt repayment over business growth. It can be damaging to the progression of your business and may take years to reclaim the money owed or accrue new funds. Therefore, it is essential to carefully consider the debt levels that you can realistically manage before acquiring any online business.
7. High Maintenance Requirements
It's no secret that having an online business requires a significant level of ongoing maintenance to ensure that your website or e-commerce business is functioning correctly, the content is up to date, and any technical issues are resolved promptly. Depending on the type of online business, maintenance can be time-consuming and will require specialized skills.
This may take away other necessary business activities and find yourself spending significant amounts of money and time on maintenance rather than investing in marketing and growth strategies for your newly acquired business. Ensure you have, or can afford, the required resources and skills to keep the business running online smoothly.
Buy Established Online Business Today
Buying an established online business can be a complex and challenging process, and you as a prospective digital business buyer need to carefully evaluate and mitigate these and other risks before making a purchase.
However, there are clear advantages to buying and scaling an already established online business. From existing customer and supplier relationships, recurring revenue, reputation, systems and historical data, you can leverage the expertise of the previous owner, avoid the steep learning curve associated with starting a new business, and ultimately grow the business quicker and more profitably.
Hatchit
If you’re looking for your next online business venture, Hatchit can help you by efficiently identifying opportunities that match your buying criteria and connect you directly to listing owners and brokers. Save yourself the time of building a business and brand from scratch - use your skills to bring an already profitable e-commerce business or website to its next growth stage!
Photos from Pexels.com: by Vlada Karpovich, Liza Summer, and Rodnae Productions.
Disclaimer: This page contains affiliate links to Hatchit’s broker-partner sites. If you choose to buy or sell a business through a brokerage site we link you to, Hatchit may receive a referral fee at no additional cost to you. Thank you.
