There’s a cycle in the development of any new technology and how it enters the business community. Part of the growth process for any new idea is to be a good enough model to establish a business around it, and have that business become valuable enough to resale.
In the small business community we’re beginning to see the maturing of the online business market. Up until very recently when people talked about owning an online business they were talking about starting one. But, that’s beginning to change – small online businesses are trickling into the business-for-sale market.
Owning and running an online business, like any business, has its positives and negatives. The way to increase the positives and decrease the negatives begins with the buying process, nothing takes the place of solid due diligence. Here are 2 vital areas to consider.
Technical
An online business is in a volatile and rapidly changing industry. How much technical knowledge do you have and how much is needed for the business? Do the ideas of regularly tracking site traffic metrics, developing SEO tactics, rooting out plagiarized content and maintaining your legal/ethical responsibly for security excite or bore you?
If you can’t or don’t want to manage the day to day technical issues you should have answers to these questions – who will, how much will they cost and how hard are they to find? The problem of attracting and retaining qualified people is an on-going issue that’s not going to be resolved any time soon, if ever.
Financial
Be sure to assess the company’s actual value, risk and outlook. Traffic totals are routinely unknown, manipulated and lied about. Traffic is money, so don’t accept guesses or vague numbers. The financial information should line up with the site’s metrics, all of which should be hard numbers gathered over a realistic time period.
If you aren’t an expert hire someone who is, someone who knows the industry’s past and current benchmarks. As well as, someone who understands and has the data for the future outlook specific to your product or service. Over inflated forecasts for the financial potential of online businesses are legendary.
Don’t be swayed by the hype. The process of buying an online business is the same as buying one in a more established area (i.e., retail or food store, machine shop, insurance agency). Taking your time and doing the due diligence is still the key.
