How to buy an online business?

| 2 min read

Online businesses have started flourishing, particularly because of the lockdowns.  Though all business ventures are a risk, an online business is relatively a low-cost operation to start up with a chance to reach a global audience. Therefore, it is a sound investment.

This article will take you through the important factors you should keep in mind if you want to buy an online business.

Which website to choose

It will be beneficial for you if you look for an online business that sells a product or a service you are interested in. It is important that you have a passion for the business you want to purchase. It will also make you better at catering to customers.

Additionally, you will need to have some tech skills and some experience in using the backend of a website. If you lack in these quarters, sign up to some website training course.

Further, you will have to be organised and focused on running an online business. While online business allows you to work from anywhere, it is pertinent to have a dedicated workspace.

What to look for in an online business

You should find out the following:

  • Traffic figures of the website
  • Average conversion rate (how many customers actually make a purchase)
  • Where the traffic is coming from
  • Does the owner negotiated good prices with his supplier
  • How much stock will be included in the sale
  • How is the reputation of the business
  • How user-friendly is the website
  • Does it run smoothly or does has technical glitches
  • How long has the business been running
  • Why is the owner selling his business
  • Are there other websites selling the same or similar products or services
  • Can you create a competitive edge over the competitors
  • Is there growth for potential growth or diversification

Due diligence

The process of due diligence is one that provides a thorough investigation into a proposed investment transaction. It means you check the investment worthiness, and assess the full claims made by the owner. This check is usually performed by a solicitor and accountant who act on behalf of the buyer. A large portion of due diligence will involve checking financial statements and accounts.

Click here to find more about due diligence.

If you buy wisely and do a thorough research of the background and potential of the business which attracts your interest, you will get immediate access to the existing base of customers and suppliers. This will ensure that you know what you are getting into.

Franchise opportunity

Purchasing a franchise in the online business industry is a good option for those with limited capital. It will allow you to buy a business and get the support and training which the franchisor will provide.

You need a solid contract

You, as the buyer, will have to produce the sale document. This agreement will have to cover the mechanics of the deal – what is being sold, where it is, how it is to be transferred, and so on. This is where warranties come in. Click here to download a business sale agreement if you are purchasing an online business.

Warranties which are legally binding promise as facts about the business, which provide information relating to the business. Click here to know about how warranties work and why they are important.

Other documents you need

The starting point for documents are those relating to the sale and purchase – of company shares, or of business assets.

Additionally, you may need assignment and novation agreements to transfer contracts the seller is a party to.

If company shares are being sold, then you will need directors service agreements, board minutes to document approvals to changes, and possibly, a new shareholders agreement and new articles of association.

Further, you will also need website terms & conditions and website privacy policy.

We can help you find exactly what you need for your circumstances if you contact us and ask.

Please note that the information provided on this page:

  • Does not provide a complete or authoritative statement of the law;
  • Does not constitute legal advice by Net Lawman;
  • Does not create a contractual relationship;
  • Does not form part of any other advice, whether paid or free.
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