This article are provided for information purposes only, and are not intended as legal advice.

Buying a business on line

January 22nd, 2009

When you buy a traditional business, you can look at the business, see the staff, see the inventory and monitor the quantity of customers visiting the business if it is a retail business.  When you buy a business which is internet based, you are not able to see any tangible assets.  if the business is on line, you can do considerable research on the internet to find out information about the business. 


Online sells will always tell you the potential of the business but you need to do some due diligence.  Ask the seller for: monthly website analytical reports.  From here, look for the number of visitors per day, number of page views, key words used to get to website, what is the bounce rate (for example, what percentage of people go to the first page of the website and how many go inside the website to another page.  If the visitor does not go past the home page, Google considers the viewed to have bounced).  The lower the bounce rate, the better, that means a higher percentage of people go into the website.  What is the conversion rate from visitor to client, what is the traffic flow flow to the website and what countries does this traffic flow come from?  If you purchased an online business and you are located in India but there is no traffic from India to the existing website, you will have to build up traffic flow from scratch.  Are you buying an existing traffic flow or are you required to develop new markets?   What are you actually buying?


If you have an online business and it is making money, there will be strong evidence to support the revenue.  Many companies use Paypal or other credit card services which provide details of prior months transactions.  If the seller does not provide this information to you, you should question the integrity of the information provided by the seller.

Please note that statistics can be deceiving.  I use three different analytical softwares to monitor my website traffic.  All three provide considerably different results. 


Filed under: Buying a business — Gary Landa @ 11:06 am

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