In the past years, more and more customers have turned to online shopping for its speed and convenience. As of 2024, there are approximately 2.64 billion online buyers worldwide. This surge in digital commerce has a lot of people looking into buying an online business.
However, despite the potential it projects, buying an existing online business requires careful evaluation to prevent unexpected challenges and costly mistakes.
In this guide, we’ll break down what an online business is, highlight the essential factors to consider before buying one, and provide you with the tools you need to make a well-informed purchase.
What is an online business, and who buys one?
An online business is a business that generates its revenue online. This could mean selling products or services, offering digital downloads, creating content, or developing software solutions. Essentially, if it earns income on the Internet, it’s an online business!
Unlike traditional businesses where you purchase a product in person, this type of business is operated remotely – which offers flexible and scalable income potential. Whether you’re a startup or an experienced business owner wishing to expand, the online business provides a wide scale of growth and opportunities.
Who might want to buy an online business?
Online business buying has become popular to business owners in recent years because of its flexibility and scalability. These are the several types of business owners who are interested in online businesses for sale:
Entrepreneurs seeking passive income
Online businesses, especially content sites, and eCommerce businesses, are perfect for anyone who wants to generate passive income since they can offer a consistent cash stream with relatively inexpensive maintenance.
Unlike building a business from scratch, an established business that has a steady traffic and revenue lets you step into a functional model without the initial setup costs and development time.
Investors looking for diversification
By taking advantage of the expanding digital economy, investors can diversify their investments and reduce risk by including an online firm in their portfolio. The digital economy provides unique growth opportunities, which helps them complement other holdings by providing a reliable cash flow.
Experienced investors utilize this method to obstruct inflation, given that an internet business can be scaled much more quickly with minimal additional resources compared to traditional business expansion.
Bloggers who are integrating tools and content
Bloggers and content creators often acquire online businesses to integrate tools, grow their content offerings, and instantly reach a wider audience. By purchasing an online business that aligns with their niche, such as one with an existing content library or specialized tools (like SEO or social media tools), bloggers can expand their value to readers and followers.
For instance, a fitness blogger might acquire an eCommerce site selling fitness equipment or workout programs. This allows them to not only expand their content but also offer relevant products that enhance their brand authority.
Purchasing an established business that already generates revenue, attracts traffic, and has a loyal customer base can help you save time and provide a solid foundation for your business’s future potential growth.
Why buy one instead of building?
For most business owners, buying a functioning online store is more alluring than starting from scratch because of several key advantages:
Skip the startup phase
Building a business from scratch requires a significant amount of time, money, and effort. For small business owners, this process can be very challenging, since it has a lot of aspects to consider. This involves everything from brand and business development to establishing your brand identity and building a loyal customer base—efforts that can take months or even years to show returns.
By acquiring a successful online business, however, you bypass this demanding startup phase and step right into a fully operational company. You’re gaining access to streamlined processes, established customer and existing supplier relationships, and a steady cash flow—all without the usual growing pains. Instead of spending valuable time just getting off the ground, you’re positioned to focus on growth and expansion from day one.
Leverage existing SEO and traffic
In competitive markets, building a website’s SEO authority and generating organic traffic can take years. Acquiring an existing online business that comes with a robust SEO structure allows the new owner to benefit from its existing search engine rankings, backlinks, and optimized content, which is a big advantage.
Opting to buy eCommerce businesses with proven SEO and steady traffic, business owners can focus more on business growth rather than building it from scratch. This results in faster ROI as customers are already searching for and engaging with the existing site.
Gain a functioning website and online presence
When you purchase an existing business with a well-designed, operational website, you acquire an existent online presence with a recognizable domain, enhanced web design, and active content. The site you purchase often has installed important tools like eCommerce functionality, a customer support system, and social media channels.
You can use this digital foundation for instant engagement and income generation rather than enduring the expenses and complications of web construction. Customers that lacks technical expertise or wish to skip the drawn-out process of building and testing a new website will find this benefit particularly valuable.
Key considerations when buying an online business
When you’re buying an online business, there are a few essential factors to keep in mind. Let’s look at some of the most important ones:
The domain and branding
- Domain quality. A high-quality domain name is a valuable asset for an online business. Look for one that’s relevant to the business, easy to remember, and well-suited to its niche. A memorable domain can help attract more customers and build trust. To ensure a smooth transition, consider using a reputable domain registrar like Web.com, which can provide tools to protect and manage your domain effectively.
- Brand reputation. A business’s brand extends beyond its domain name; it’s shaped by customer impressions, reviews, and social media presence. Before buying, take a close look at customer feedback, product ratings, and how the brand is talked about in online communities. This will give your insight into its reputation and customer loyalty.
For a smoother growth path, avoid businesses with ongoing PR issues or a pattern of negative feedback.
Performance and financials
- Traffic and engagement. Understanding traffic and engagement is essential when considering an online business. Before you buy, take a close look at where the website’s visitors are coming from. Since you don’t own the website or the business yet, you can check the breakdown of traffic sources through third-party website analysis tools such as:
- SimilarWeb – this tool provides estimates of website traffic, engagement metrics, and traffic sources.
- Ahrefs – This SEO tool offers a “Site Explorer” feature that gives you an insight into a website’s backlink, organic keywords, and estimated traffic.
- SEMrush – Like Ahrefs, SEMrush can provide insights into a website’s organic search performance, paid advertising, and social media traffic.
Although they are not as accurate as Google Analytics, these tools can give you an idea about how the website is performing online.
A business with diverse traffic sources is often more stable, as it’s not dependent on any one channel. High engagement metrics, like a long time spent on pages and low bounce rates, can also indicate a loyal audience. This level of engagement often leads to better conversion rates and strong customer retention—both key to a thriving business.
- Revenue and expenses. Pay special attention to the revenue sources of the company. Consistent revenue streams—especially from subscriptions or other recurring models—are generally more stable and support long-term planning better than one-time sales.
You’ll also want to make sure you examine key expenses, such as marketing and operational costs, to ensure that the business is running profitably. High expenses can quickly eat into profits, so understanding these costs is crucial for assessing overall financial health.
By reviewing monthly or quarterly sales and expense records, you can gain valuable insights into the business’s financial stability and potential for sustainable growth. This financial consistency is key to determining if the business is set up for lasting success.
Growth potential
- Market trends and scalability. It’s also important to evaluate the market trends and the scalability of the online business you’re planning to purchase. For example, if the business focuses on eco-friendly products, assess whether demand for these products is strong and expected to grow.
If the industry shows promise, think about ways to expand the business. This might mean introducing new, relevant products or reaching complementary niches. Scalability also includes evaluating the technical side—ensuring that the website’s structure can handle more traffic or an expanded product line as the business grows.
- Untapped revenue opportunities. Most online businesses have specific areas that have not yet been fully developed and used. A perfect example for that is when a business is heavily reliant on organic traffic, it could greatly benefit from a paid advertising methodology.
As an alternative, increasing the average order value through cross-selling or up-selling opportunities within current product lines can potentially raise profitability without requiring a large increase in marketing costs.
Operational requirements
- Daily operations. The daily engagement of each online business varies. For example, SaaS businesses (Software as a Service) often require ongoing technical support, while content-based websites might need frequent article uploads or audience interaction. Knowing these responsibilities helps in determining whether you can handle the workload or if you’ll need to bring in additional help.
- Outsourcing vs. in-house. To maximize your time for strategic growth, consider which tasks could be outsourced. For instance, an eCommerce store might benefit from using third-party logistics for shipping and inventory management, while a content-heavy site could hire freelance writers to maintain a steady flow of articles.
Risks and liabilities
- Legal considerations and financial due diligence. Verifying contracts, examining tax conformity, and looking for unpaid debts or liabilities are all examples of legal and financial due diligence. To protect your investment, consider using escrow services to ensure that all conditions are met before any money changes hands. Having a legal professional review contracts can help prevent misunderstandings and safeguard you against unforeseen risks.
- Technical risks. Many online businesses rely on external factors, such as affiliate connections, social media platforms, and search engine algorithms. For example, a business that depends heavily on Google traffic may face risks associated with changes to search algorithms. Similarly, if a significant portion of revenue comes from a single affiliate, any alterations to that affiliate program could lead to cash flow challenges.
How to buy an online business in 10 simple steps
Buying an online business can be a rewarding investment, but it’s important to take a structured approach to ensure you minimize risks and maximize your potential returns. With the right strategy, you can make a confident purchase that aligns with your goals.
1. Define your objectives and budget
Start by clearly defining your objectives. Ask yourself what kind of online business you’re interested in and what you hope to achieve with it. Here are some questions to guide your thinking:
- Are you looking for a source of passive income?
- Do you want to expand an existing portfolio?
- What specific niches are your target? (For example: eCommerce, SaaS, or affiliate sites.)
- How much is your budget?
Identifying your business goals and objectives and having a clear budget can help you narrow down your choices. Remember, your budget isn’t just about the purchase price of the business; it should also include potential expenses like marketing, upgrades, and website maintenance.
2. Research marketplaces and potential listings
Once you have your clear objectives and budget, you can start searching for available online businesses by utilizing reputable marketplaces and brokers that sell online businesses. You can find online businesses and eCommerce stores on the following:
- Flippa. Offers a variety of online business types at multiple price points.
- Empire Flippers. Known for its rigorous vetting processes and high-quality listings.
- FE International. Focuses on established, profitable online businesses.
As you explore listings, keep key factors in mind, such as the business type, revenue, traffic, industry, and growth potential. When you’re ready to secure a business, transferring the domain is an essential step to establish full ownership. Web.com’s domain transfer services makes this process smooth and secure, helping you establish your new online business with confidence.
3. Conduct initial screening
Evaluate multiple listings and remove those businesses that don’t meet your criteria. The key elements you need to look for are:
- Revenue and traffic trends.
- Business model.
- Operational complexity.
4. Request key financial and operational information
Once you have identified a promising listing, reach out to the seller or broker for additional information. Here’s what you can ask:
- Profit and loss statements. Monthly and yearly financial statements which provide a better insight into the business’ revenue, expenses, and profit trends.
- Traffic analytics. Since you do not own the website yet, you can ask the seller to give you a breakdown of where visitors are coming from (organic search, social media, direct traffic, and paid advertising. This will help you understand user behavior, their time spent on your site, and bounce rates.
- Owner involvement. Understand the seller’s role in the daily current operations and if the business will need a transition or training phase.
5. Perform due diligence
This is the most critical stage in the process. Due diligence is a series of reasonable and legal steps taken by a person to satisfy a legal requirement, especially when purchasing something.
In buying an online business, you need to conduct a comprehensive due diligence to reveal any potential issues with the business:
- Financial verification. Validate the profit margins, costs, and income statements which include checking invoices, financial statements, and tax declarations.
- Legal review. Consult legal professional in verifying contracts, IP ownership, trademarks, and liabilities. Make sure that there are no unresolved issues or hidden debts.
- Technical analysis. For content-based or SaaS businesses, take time to review website stability, hosting, and tech stack to point out possible maintenance costs or required updates.
- Market competitor analysis. Assess the business’s market position and competitors. By understanding the current market trends, you can project the business’ growth potential.
6. Negotiate terms and price
Based on your findings, start negotiating for a fair price. This stage may include discussions revolving:
- Purchase price
- Payment structure
- Non-complete clause
- Training and transition
7. Secure the transaction through Escrow
Escrow service refers to a financial agreement where a neutral third-party holds assets or funds before they are transferred from one party to another. Utilizing an escrow service gives you additional protection by holding funds until all the conditions you have agreed on are met. Escrow service will:
- Manage the transfer of funds between the buyer and seller.
- Confirm the transfer of assets (domains, website files, customer data, and social media accounts).
- Offer a refund period if vital assets or obligations are not met.
8. Transfer ownership and assets
Once you have accomplished all the negotiations and all the conditions are finally met, you may begin the transfer of assets:
- Transferring of the domain ownership and website hosting.
- Customer accounts and data (email lists, customers service accounts, existing supplier relationships, and CRMs).
- Business accounts and tools (Google Analytics, Google AdSense, social media, and advertising accounts).
Upon transferring, you’ll need to be sure your new online business is secured and protected. With Web.com’s security services with features like malware protection and SSL certificates, you are assured a safe and smooth transition to your new business.
9. Implement a post-purchase strategy
Develop a strategy that will be implemented for the first 90 days to maximize the business’s value and ensure stability.
- SEO and content optimization. Create and update any outdated content and strengthen SEO strategies to maintain or increase organic traffic. With Web.com’s SEO tool, you can help identify optimization opportunities and track your progress effectively. Additionally, our marketing tools can also support broader promotional efforts to drive traffic and engagement.
- Operational improvements. Enhance processes, explore outsourcing, and consider upgrading some areas to customer service or product offers. Web.com’s web hosting services can support these improvements by providing reliable performance and scalability as your business grows.
- Growth initiatives. Point out immediate growth opportunities like product line expansion, integrating a paid listing technique, or leveraging email marketing.
10. Monitor and evaluate performance
After the changeover, keep a careful eye on the company’s performance:
- Monitor data such as cost-effectiveness, revenue, traffic, and customer involvement.
- Examine financial records on a regular basis to guarantee steady profitability.
- With an eye toward long-term growth and profitability, modify your tactics considering performance statistics.
You may confidently buy an internet business with a clear grasp of its value and growth potential if you follow these steps. Your new business can be set up for long-term success with careful preparation and a smooth transition.
Common mistakes to avoid
Here are some of the common mistakes you need to avoid when buying an existing online business:
- Failing to conduct comprehensive due diligence. Review traffic sources, growth potential, and the business’s current operations to avoid potential risks.
- Overlooking customer and revenue concentration. Businesses that rely heavily on a single source of income are at greater risk of failure. Look for opportunities with diverse revenue streams and a broad customer base to ensure stability and reduce risk.
- Skipping legal protections. Don’t overlook the importance of legal safeguards. Utilizing escrow services and including non-compete clauses can protect your investment and ensure a smooth transition during the purchase process.
Make the right investment decision with Web.com
Buying an online business can be transformative, offer immediate income, and secure future potential expansion if approached strategically. Whether you are into buying an online business or planning to build it for selling businesses later, following a step-by-step acquisition process can surely help you make a well-informed and right investment decision.
Ready to ignite explosive growth? Once you acquire your new business and its website, consider transferring your site to Web.com. Streamline your operations with Web.com’s efficient website builder, SEO tools, and reliable hosting!
