Posts
Loading ...$50K to Buy an Internet Business Opportunity - Now What?
The eBiz Buy/Sell Indicator turned positive for eCommerce sellers after the 4th of July. This turn reflects last year’s record pace into a crescendo of buying that kept the Indicator positive for sellers throughout the balance of 2005. Including a frenzy of buyers seeking an eCommerce business to buy during December. Yet this year, the category of buyer is different. This year the buyer is learning about eCommerce and has a smaller budget; around $50,000 for a down payment to buy an eCommerce business.
As the Indicator tilts in favor of the seller I thought some buyer tips might help balance the scale. So you’ve around $50,000 to buy an eBusiness? Now what?
First, to reduce your risk, only shop for an eCommerce business that matches your background. Perhaps it’s a hobby that you know well. For example, if your hobby is golf, then seek out an eCommerce business that sells golf accessories. If you’ve recently had a baby then seek out an eCommerce business that sells baby products. This will help excite your desire, and minimize your learning curve, for sourcing products.
Second, once you’ve learned the domain name of the eCommerce business you want to buy then use a free (remember your limited budget?) service like URLTrends to gain a snapshot of the domain’s presence on the web. Check the domain’s Page Ranking and if it doesn’t have one, move on to your next potential eCommerce acquisition candidate. Does the domain have an Alexa Ranking? If it’s over 1,000,000, or has none at all, move on to your next eCommerce candidate. Below are what I would propose as minimums.
- PageRank: 2
- Alexa Rank: 1,000,000
- Incoming Google Links: 1
- Incoming Yahoo Links: 10
- Incoming MSN Links: 25
- Incoming Alexa Links: 2
Third, to stretch your budget, ask the seller if they would carry a note for 25% to 50%. Most sellers will say no. Then suggest that the “domain name” be placed in an escrow account until the note is paid. Most sellers will say yes. Just be sure to keep money set aside to make the monthly payment on time as the remedy for default is the domain returning to the seller. The seller also keeps everything you paid to that point. That’s “why” the seller feels comfortable extending a note. Not that they want the business back, but they are pretty sure you’ll do everything possible to make that monthly payment.
Fourth, have the seller itemize their hours, in writing, per week. The in writing part is merely to have the seller think more clearly on the actual number of hours. Also ask what additional hours they work during a month. The primary weekly categories are:
- website maintenance
- processing order
- sourcing product
- answering emails and/or phone
Fifth, once you’ve made your offer, as part of your “due diligence” make a Random Walk.
Update: 2nd Quarter 2007
July 23rd, 2007 at 5:05 pmThe eBiz Buy/Sell Indicator turned positive for buyers in this quarter. In a buyers market sellers must be more flexible when it comes to terms and asking prices.</p>