Business Startup

Is It Safe and Viable to Buy a Business Online?

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Written by MicroStartups

Building a business from the ground up is extremely complicated. You need to do extensive research, create a business model, secure all the necessary materials and resources, and then successfully overcome the inevitable obstacles.

Before the internet introduced ecommerce, you had the option of buying an existing business to skip the complicated setup, but you were always limited by location. If you didn’t want to move, you could be stuck waiting indefinitely for something relevant to hit the market in your area.

But now that much of the retail world runs exclusively online (and freelancers are everywhere), the options for buying a business have expanded greatly. Today, you can not only buy a regular business online, but also buy an online-only business that you can run from anywhere.

And while it may sound too good to be true, it’s most certainly not a scam. In this article, we’re going to look at what buying a business online involves, and determine why it’s perfectly safe.

How does buying a business online work?

The financial element of buying a business online is ultimately the same, and the difference lies in how you find, value, and negotiate for the business. Just as buying a business before the internet became prominent typically required a go-between in the form of a broker, an online business sale will usually take place through a marketplace of some kind.

An interested buyer will browse such a marketplace, review the listings, and find a business that interests them. They can then do independent research, do an in-depth assessment of the website, and reach out to the seller for further information before making a decision.

Once an agreement has been reached, all the elements included in the offer will be transferred over to the buyer, typically including websites, trademarks, logos, and hosting. The buyer will then be able to make alterations at their leisure.

How is it better than buying a business traditionally?

There are two main advantages that make buying a business online superior to the traditional approach:

  • You can browse options from anywhere. Without needing to go through any intermediaries, you can get a high-level view of all the businesses available, quickly seeing what their strengths are and how they differ.
  • All listed businesses are online-centric. To be listed in an online business marketplace, a business must have a suitable website live and operational, thus ensuring that you’re only looking at businesses in reasonable condition.

And in cases when you’re looking at an online-only businesses, there are more advantages still, including the following:

  • You can run the business from anywhere. Want to work from home? If you buy an online business, you’ll be able to handle it over the internet, something you can do from anywhere with internet access (innovation has become global). You can realistically purchase a store from any location through a trusted site or marketplace — consider that while stores can be listed by location, there are no physical premises to be taken into consideration, so the only factor is state registration. Ebay also has some local business listings and websites for sales that you can filter by locality, but the majority of what you will find will be generic or location-independent.
  • The operational costs will be relatively low. With no physical premises to contend with (and often no product stockpiles to store or offload), you’ll be able to limit your spending to the core business, leaving you in a better position to move ahead.
  • You can easily make major changes. If you’d prefer to change the business name, or scrap a large portion of the operating procedures, you can do so very easily when you’re purely working with an ecommerce store. This grants you a great deal of flexibility.

Are there any drawbacks?

Even in ideal circumstances, there can be some drawbacks to buying a business online. Here are two that spring to mind:

  • Marketplaces can give false confidence. Business marketplaces have access to analytics data, and can thus appear very authoritative and reassuring, but there are things to be remembered: firstly, performance data from the past doesn’t guarantee success in the future, and secondly, analytics data can be misleading or even inaccurate. If you’re unsure about something, do some further investigation.
  • Options can be somewhat generic. You’ll see a lot of bare-bones ecommerce sites in online marketplaces, and it’s a problem inherent to the system since it’s fairly easy to create a store with the intention of selling it. Maintain a realistic appreciation of the value of any given site and remember that you’ll likely need to make some major changes before you try to scale it.

Can an online business sale be a scam?

Absolutely, yes — just like a traditional business sale. Marketplaces can get things wrong, sellers can misrepresent their businesses, and major problems can be concealed given enough effort and a strong lack of scruples.

Before you issue any payment, do some detailed investigation and carry out a background check if you feel it’s needed. And when you’re ready to proceed, be sure to use an escrow service so you’ll be protected in the event of an attempted scam.

Something you shouldn’t overlook is the sometimes-confusing state of regulations pertaining to ecommerce. In some cases, retailers get away with defying state, national, or even international distance selling laws through sheer luck, then lead prospective buyers to believe that all legal matter have been properly addressed.

Before buying an ecommerce site, carefully examine its operation to confirm that everything is above board. If you find lingering issues, you can back out, or even leverage them to get a better deal and resolve to fix them yourself before moving ahead with the store.

In general, though, selling a business online is definitely not a scam. It’s a totally legitimate way to transfer a business to an interested party.

Should you buy an online business?

This really depends on what you’re trying to achieve. If you want to buy a fully-functioning business that will perform well indefinitely requiring minimal input, this probably isn’t the right direction for you, and you should look into a brick-and-mortar business instead.

The reason for this is very simple: where someone with a thriving traditional business might want to sell it to move on to new pastures or simply be rid of the premises, someone selling an online business is a strong indication that it isn’t in that kind of position, because ecommerce overheads are sufficiently minimal that it could easily be kept going.

However, if you’re looking to buy a business to subsequently repurpose (particularly if you want the option of working from anywhere you can get online), then you should absolutely check out some online business marketplaces. If you happen to find a site that really suits your style, it might just turn out to be an excelle

About the author

MicroStartups

A team of writers and marketers, MicroStartups was founded to inspire the entrepreneurial and business community to give back. We believe in business growth through giving and supporting the local community.

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