How Research Is Your Treasure Map to Finding Your Perfect Online Business Acquisition
There’s an ocean of online businesses out there for you to acquire; they come in many shapes and sizes, each suited to particular buyers. Needless to say, there are many factors to consider when selecting one that’s right for you.
Many people have an idea of how research works in general, but when it comes to conducting research on online businesses as potential acquisitions, there are specific considerations you need to bear in mind.
When you understand what to research about online businesses and how you get clarity on which businesses could be good acquisitions for you and where you can find them.
If you haven’t set your guidelines for your research, then you’ll find yourself wasting a lot of time aimlessly searching for businesses in the wrong places and looking at the wrong businesses in the wrong ways.
In this article, you’re going to learn how to set up your research strategy so you can find the business you’re most likely to be successful with. And hopefully, one you enjoy owning!
It all starts with the simple matter of setting your budget.
The first factor to consider is how much you can afford to spend on your acquisition, not just the business.
When you’re browsing a business marketplace, have a look at the businesses priced within your liquidity range to see how much they’re generating in monthly profit.
Earnings can range quite widely because business valuing is a nuanced craft with many factors to consider. It’s not just a case of the business that earns the most is worth the most. In fact, in a data study we conducted on business valuing, we found that two businesses earning the same amount of profit can vary in price by $10,000.
This is why when assessing potential acquisitions you should look at the whole of the businesses to get an idea of how they’ve been valued. For example, if two similar businesses have different valuations, see if you can find out why (we’ll explore this later in the article).
As mentioned previously, your acquisition budget needs to include more than just the purchase price of the business.
Savvy buyers leave some of their budget for loss mitigation or further investment. For example, if the business needs improvement in some areas, some capital might be required to make those improvements.
Consider how much you can afford if the business performance drops for a few months. Ideally, your business will scale from day one, but if you need to invest in some scaling campaigns or do site redesigns, then there could be times when your business experiences a lull.
You should also allocate some of your budget to business growth.
Even if you want an asset that you don’t have much active involvement in, you need to invest some capital and resources into growth. In a data study we conducted on the return on investment (ROI) of online businesses, the buyers who made a loss didn’t do anything to the businesses they acquired.
Once you’ve set your budget, you can start researching which business model is right for you.
The best thing about online businesses as investment assets is you don’t need to have any experience in online business to run one.
We’ve had many first-time buyers be successful with online businesses, including Sushee Nzeutem a 50+-year-old ex-project manager from Nigeria who bought a YouTube channel and increased its revenue by ten times.
There are many others like Sushee who have transferred their professional skills into an online business to build a new source of wealth.
We tend to find that engineers do well with beginner-friendly ecommerce models like Amazon FBA because they are process-oriented people, which suits a logistics-heavy business model.
A good match for teachers or educators is the content site model. Content sites come in various forms, but most of them are blogs monetized through affiliate programs and display advertising. When visitors come to the site and click through affiliate links or ads, the site owner earns a commission either on the click or the sale of a product or service made by the site visitor.
Teachers and educators do well with this model because it is built on articles that educate an audience.
Other investors who do well are those with direct skills in the business model. This includes developers who acquire a software as a service (SaaS) business. Even though they may never have run a business before, they’re able to be successful when they acquire one because they have the skills to manage the software on which the business is built.
Consider your skills and experience when researching how different business models work and list out what skills you have that are transferable to run those models.
There are even business buyers who are able to be successful with a business because they have experience or interest in its niche.
Niche & Audience
Not only can your professional skills and experience be transferred to the operations of the business model, they can also be transferred to the business’ niche on a strategic level.
Your knowledge of a niche can be used to manage and grow your business. On one level, if you match the profile of the target audience of the business you’ll know how to design products and content to serve the audience’s needs.
On another level, you’ll understand the industry the business operates in, including its laws and regulations, product ranges, hottest topics, biggest brands, and overall market conditions. All of this information is pivotal in ensuring business success.
This knowledge will also help you find good businesses to acquire.
When you start looking at sites, see what content, products, or services they’re currently offering and see if they’re offerings you can work with. If you have knowledge or experience with the offerings, then you’re in a good position to be successful with that business. If you have experience with a similar product, topic, or service then you might be able to transfer your experience over.
It’s also good to research what’s already out there, i.e. what the business’ competitors are sharing in their content, what products they’re selling, or what software services they’re offering. Understanding this can allow you to identify gaps in the market.
Just being a member of the business’ audience puts you in a great position to be successful. You’ll have more knowledge than entrepreneurs who’ve built a business in a niche they aren’t familiar with, which gives you a competitive advantage.
Once you know which business models, prices, and niches are within your reach, you can consider what type of business will help you achieve your personal goals.
What will acquiring an online business help you achieve?
People buy businesses for a variety of reasons. Some want to replace their full-time income so they can leave their job; others want a side project to supplement their income; others are investors who want to try out a new asset class.
Whatever goal you want a business to help you achieve will determine which type of business you need to buy.
For example, if you want a business that will replace your day job, then you need to acquire one that is earning the same income or more so you can sustain your lifestyle. It should also be a model you’re familiar with or can transfer your skills to, or it should be in a niche you’re familiar with so you can effectively manage and scale the business.
If you’re looking for an almost-passive source of side income, then the business niche and model are less important as you’re not planning to actively run the business.
Take some time to get clear on your ideal outcome with an online business. When you understand how the business is going to support your lifestyle and help you achieve your goals, then you can create a checklist for the minimum requirements of your acquisition and start searching.
The Right Business For You
All of these factors considered together will help you find the right business for you.
While there are thousands of online businesses being sold every day, you don’t want to restrict your criteria too much. Set yourself some high-level criteria for each of the areas we’ve discussed. That way, you give yourself more opportunities than if you had very strict criteria.
No business is going to be perfect, so it’s good practice to leave some room for compromise.
Your ideal business might not be perfect in all areas. For example, it might be the ideal business model based on your experience and its build might be good for your personal goals, but maybe the niche isn’t quite right. You can learn about the niche to build up your knowledge in that area.
The best thing about buying an online business is you don’t have to do it alone.
Find Your Ideal Business With Empire Flippers
At Empire Flippers, we offer a personalized concierge service to help you set your business acquisition goals and criteria and acquire the business that’s right for you.
We have teams dedicated to every stage of the acquisition process, from finding your acquisition targets to migrating the business over to you.
We have the world’s largest curated online business marketplace where you can find pre-vetted businesses for sale. Create a free account to use our 20+ search filters to find your ideal business by model, niche, and budget.