If you just started building your online business (branding, marketing, launching the site, etc.), you probably know it takes time and energy. But if you are an experienced e-commerce store owner in need of expanding your portfolio, you might even be in a better position, as buying an already established business allows you to run it quickly and avoid the stages of the onboarding process.
When acquiring an online business you expose yourself to a significant amount of risks, such as the state of the brand (which can be damaged beyond repair), the fake financial statements of the previous owner, or being tricked into closing a deal that could allow the previous owner to profit by taking a percentage of your sales. Thus, remember that in comparison, starting from scratch can have potentially fewer headaches.
But if you still believe that purchasing an existing business is better for you, then you’re in luck, because we are coming to your aid by compiling the following guideline with useful tips that will encourage you to proceed wisely in your journey.
Guideline to buying an e-commerce store
1. Find your business
Apparently, the first step is the most difficult because you need to know where to search for a business for sale. My personal recommendation is Exchange by Shopify because it is a trustworthy choice due to the many features that make it easier to conduct your business. There are a few things to look after when you’re selecting the sort of business you would like to purchase:
- The financial statements should show true numbers befitting of a healthy business.
- You should already be familiar with the niche so that marketing and branding can go smoothly.
- The site should own well-monitored traffic.
- Find out why the owner wants to sell.
2. Properly research the business you will buy
In order to make sure the seller’s claims are true, you must do your own research. There are many tools on the market that can help you verify the popularity of the website, so feel free to use the one you like. Be aware of the site’s traffic and sales because while you can improve along the way, you need to be properly informed first. Check out reviews to see what kind of reputation the brand has because most of the time a damaged brand cannot be fixed, so it is not worth buying unless you want to rebrand it.
3. Calculate the overall costs of launching a website
Apart from the price you will pay for the site itself, which sometimes might seem cheap, there are other numbers you should pay close attention to. Don’t submit a bid before taking into consideration all the extra costs necessary for onboarding your e-commerce business.
Here are some potential costs that you need to know about:
- Renovating the website and making it user-friendly.
- Improving supply chain.
- Expanding to new territories to create a new base of customers.
- Acquiring proper software to make the process easier.
- Applying new advertising campaigns.
4. Pay a fair price for the business you desire
Once you’ve chosen business, and followed all the steps we mentioned above, it is time to offer a fair bid to the seller. Negotiation is a common practice, and we recommend you try it by using the following formula: (Yearly potential profit) – (Your own onboarding coasts) = A fair bid
Negotiation doesn’t have a predetermined set of rules, so it all comes down to your personal skills and what you think about the business when you consider both the risks and the key points of such a purchase.
If the seller agrees to your bidding price, we highly suggest hiring an attorney to analyze the acquisition agreement. The terms should clearly show who owns the business and other intellectual property rights.
So, we believe congratulations are in order because you’re now the owner of an e-commerce business. Remember to proceed with caution and to always protect your business!
