Article contributed by Don Daszkowski
Buying an online business is very different than buying a brick and mortar business. Your due diligence process when buying an online business will actually be easier than when buying a brick and mortar business.
Before buying any business all buyers should investigate all aspects of the business, this is what we call the due diligence process. When buying an online business you should investigate all of the sources of revenue the website takes it. Since all transactions including sales of products, ad revenue and affiliate sales are all done online, all of these transactions will be well documented and accurate. Be sure to ask the seller for access to these reports. With a brick and mortar business many transactions are not documented and it is very difficult to prove these sales are really taking place.
If you are buying an online business based on the amount of traffic or visitors the website receives or because the seller claims to make millions of dollars, you must review the website’s monthly web analytic reports. The web analytic reports will tell you the number of unique visitors, number of page views, the keywords that users type in to find the website and much more valuable information. If a seller is not willing to share any of the above information with you, you should be very weary and consider not buying the business.
In addition, it is strongly suggested you gain access to live reports to few current and past data. If the seller is uncomfortable giving you access to this sensitive information suggest you meet in person and review the reports together. There have been cases where individuals have altered screenshots of reports to show false revenue data. So if the seller can only offer you screenshots of the reports be very careful.
Since an online business is primarily online you can do thorough research through search engines, on other websites and on online forums about the business. If the business has a following you will most likely find a lot of feedback about the business on other websites and in the search engines. With a brick and mortar business it is usually very difficult to find actual customers that can give you their honest opinions on the business. Since online shoppers are accustomed to new technologies you will find more information on an online business than you would with a brick and mortar business.
The bottom line is… If an online business is generating revenue it will be well documented and easy to view past history and stats for the business. If you are thinking about buying an established online business that is already making money, there will always be data to back up these earnings claims. If the seller is hesitant to share these reports with you, look elsewhere.
About the Author
Don Daszkowski is President and CEO of BusinessMart.com. BusinessMart.com has thousands of businesses for sale, franchises and small business articles. Don is also About.com’s Guide to Franchises. About.com is a New York Times Company.