How to Buy a Website Business

Owning an online business is a lucrative way of becoming an entrepreneur.

After all, you can work from anywhere in the world, and the cost of operation is low compared to brick and mortar setup.

There are two ways to become an online business owner, start from scratch or purchase an established business.

For the former, you’ll have to pick a profitable niche, create your website, develop a product, build your email list, create content, and promote your products.

Why not let someone do all these for you? The grind of starting an online business from scratch is not for everyone.

This tutorial will teach you everything you need to consider when buying an existing online business.

Let’s go.

How to Buy  a Website Business

Starting a business from scratch can be a very risky endeavor. According to research, 18% of businesses fail in the first year, and almost 50% fail within the first five years.

For this reason, buying an existing business can help you escape all these initial worries and quickly get your feet wet in online entrepreneurship.

That doesn’t mean that purchasing an existing business is less work. Rather, it means you won’t have to scratch your head on what and where to start.

While it may seem more expensive, there’s a long list of benefits that come with buying an already thriving busines

• Pre-established customer base.
• Recurrent income and revenue
• Already recognized business name
• Ready-to-go team
• Easier funding and so on.

To help you get the best deal for your money, we’ll look at things to consider when purchasing an online business.

How to Buy a Website business: 6 Factors to Consider

To ensure you don’t end up with a dud, here are some factors to consider when evaluating a business with the intent of buying.

1. Verify Business Performance and Financials
2. Check SEO Traffic and Online Presence
3. Know Business Reputation
4. Understand The Business Model
5. Analyze Future Growth Potential
6. Valuation and Pricing

Verify Business Performance and Financials

You want to ensure the business you’re buying has steady monthly revenue, or at least the ability to do so.

The seller should be able to give you access to the company’s financial records. You should demand this as a condition of signing any agreement with them.

The business should be well-established, with a client base and reliable financial papers, for at least two to three years.

Its annual revenue should demonstrate a history of success by increasing over time. The owner needs to give a credible explanation if this is not the case.

Check SEO Traffic and Online Presence

Online traffic is a crucial metric when evaluating the value of a web-based business.

How does the website fair compare to its competitors in its niche? How well does it rank in search results?

A site’s earnings and number of satisfied customers are directly proportional to the volume of visitors it receives.

You need to understand the company traffic source and how that traffic translates into sales and conversions. Look for a company growing steadily and getting traffic from various reliable sources before purchasing.

You want to avoid putting all your eggs in one basket because traffic from a single source could disappear at the least expected time. A typical scenario is when traffic dwindles or dries up due to search engines’ algorithms update.

Know the Business Reputation

Just as you research what search engine thinks of the website, looking into what people have to say is equally important, if not more.

It can be challenging to change people’s negative perceptions of a company.

Check netizens’ reviews and complaints about the website. You may want to look elsewhere if there’s a documented history of bad reviews, disgruntled customers, or scam reports.

It’s better to go with a brand with a good name in the market. If it’s an ecommerce business, ask about the company’s policy on refunds and chargebacks.

Look through the brand’s social channels, read reviews on third-party websites such as Trustpilot, and pay attention to what people say about the product. A potential warning sign would be a high product return rate.

Understand the Business Model

Examine your target business sales and profitability models.

Is this business’s income stable? How does this company market, process online payments, and even follow foreign laws?

Before purchasing a business, you must learn its revenue model to eliminate grey areas and plan for future issues.

Even though smaller organizations are less likely to have fully developed operation models, they should nonetheless have a system to streamline their workflow.

If the operation model looks non-existing, that’s a potential red flag, as fixing things up might take time and money.

Also, The company’s survival shouldn’t hinge on the success of a single product or service.

Does the company only sell via its website or have brick-and-mortar locations or other online marketplaces? You must dig deep into these and more before investing in the business.

Analyze Future Growth Potential

A company may be doing well now, but how will things look in a few months or a year? Determine if the company’s product or service is a fad that will fizzle out in a few years or if it’s evergreen.  

A fantastic technique to determine whether an internet business has the potential to develop and become more profitable over time is to look at its future growth potential analysis.

This analysis can help you avoid investing in a market that is on the decline. Start by looking at businesses with sizable customer bases.

For businesses with well-established customers, a wide audience, and large social media followers, introducing new goods, keeping the cash flowing, and maintaining an upward revenue trend will be much simpler.

Even if a business’s existing clientele is rather robust, it is still important to examine the areas where there is space for growth. You have to think about the possibility of expanding into new areas and markets.

Valuation and Pricing

How do you calculate the price to pay for a website business?

Depending on industries and niches, there are various valuation methodologies.

However, experts agree that the fair market value of a successful website business is to multiply its 12-Month trailing revenues by a factor.

This factor will be determined by considering the business’s age and assets, including domain name, brand recognition, website traffic, social following, email list size, projected years of profitability, and other financial parameters.

For most blog sites and content-based businesses, experts recommend multiplying 12-month trailing revenue by up to 5x or 6x. For online stores, a multiple of 3x is appropriate.

This may vary according to the factors mentioned above. These figures are all for indicative purposes. IIf this whole business valuation of a thing is new to you, you should consult an expert.

How to Buy a Website Business: 3 Ways

There are 3 ways to buy a website business;

• Buy on Online Marketplaces
• Buy through an Online Broker
• Direct Purchase

Buy on Online Marketplaces

The most popular option for buying a website business is an online marketplace.

You’ll find plenty of businesses in your preferred niche or industry there, and you can easily filter to those that interest you the most.

You must look for a business you are passionate about working on.

Working hard at something you’re passionate about is much less daunting. Even if it’s already a well-established business, you must invest time and effort to grow and expand it.

Another great advantage of buying from an online marketplace is that you’ll get accurate and precise data about the website you want to buy from.

Some marketplaces like Exchange by Shopify pull data directly from Shopify records and display them with the listings. This means every bit of data you see regarding revenue, sales and traffic is correct.

Some of the best marketplaces to buy websites include;

• Flippa: For affiliate sites, SaaS companies, blogs, ecommerce brands and
• Shopify Exchange: Dedicated to ecommerce businesses
• BlogsForSale: Blogs and profitable website listings
• Digital Exit: Profitable businesses for sale in a variety of niches.
• Motion Invest: Niche website up for sale

Buy through an Online Broker

If you don’t have the time to search for websites on marketplaces or just want a professional to take care of the purchasing processes on your behalf, this option is for you.

Online brokers have the skills, tools and expertise to ascertain, in no time, whether or not the owner’s claims are true.

And since they only get paid after a successful transaction, It’s in their best interest to land you the best possible business and make the entire acquisition process memorable.

If anything goes wrong, you can rest assured that brokers will always have your back.

Not only that, brokers always vet businesses before agreeing to market them. This provides an extra layer of protection against their client scamming unsuspecting customers.

At the same time, they understand that their reputation is at stake. Two of the best online brokerage platforms are Latona’s and Empire Flippers.

Direct Purchase

A bold approach to buying a website business is to contact the owner directly. This is if you already know what you are looking for in it.

You may have used their services, subscribed to their mailing list, or seen their advertisement.

Once you pick a purchase interest in a website, you can contact the owner via the contact options on their website.

You can find the owner’s information by conducting a WHOIS search if that’s not available. Then, you can initiate a serious conversation about purchasing their website.

Do some background work and research before attempting to purchase. You want to be sure that the business is thriving and worth pursuing.

More Helpful Online Business Tutorials:

• How To Buy A Blog: Purchasing blogs can be a great way of making money online. You don’t want to make any costly mistakes in the process. Learn how to buy a blog today.
• How To Buy Digital Real Estate: Have you ever dreamed of owning digital real estate and wondered how to buy one? Check out this detailed guide.
• How To Buy A Domain Name Forever: Tired of annual domain name renewal? This comprehensive tutorial will walk you through how to buy a domain name forever.

Wrapping up

Hopefully, now you know what and where to look to buy a website business.

You must be ready to do your due diligence to avoid sending your money down the drain. The 6 factors above save you regrets.

Do you find this guide helpful? Do you have further questions? Let us know in the comment section below.