In many ways, buying an online business seems to be a great deal, especially if you’re looking to buy one that’s already existing and seems to be doing brisk business. With an online business, you won’t need to worry about traditional costs such as overhead and location fees. What’s more, if the business already has a sizeable clientele following, you will already have a ready market for your product.
However, buying a business online is not as straightforward as it seems and if you want to protect yourself and your money, as well as find the best deal available, you need to hire an eCommerce business broker.
An eCommerce business broker will generally act in a similar function as a traditional business broker by helping facilitate all communication and transactions between you and the seller. However, an eCommerce business broker will specialize in handling and managing the sale and purchase of online businesses.
If you’re looking to purchase an online business and you’re not sure where to start, or you’re already looking at potential online businesses that’s already on the marker, here are five questions that you can ask an eCommerce business broker to find out whether they are the right fit for you:
1. How well do They know Their Trade?
If it is your first time buying an online business, you might reasonably have a lot of questions for your broker. They should be able to confidently explain their brokerage process to you and how their services can benefit you and the seller. They should also be knowledgeable about any laws and regulations that govern the buying and selling process, as well as offer their assistance towards any administrative work that needs to be done. Ultimately, you need to feel comfortable and confident in your online business broker’s ability, experience, and track record.
2. Are they a Legitimate eCommerce Broker?
Unfortunately, there are individuals and even companies out there who will pose as a legitimate eCommerce business broker, but are only out to get your money. They might look legitimate and even sound knowledgeable about their trade, but there are some clues that you should look for:
· Do they have a strong profile page on their website, especially with personal details about the company such as their office location and current team members?
· Do they have client testimonials that they will be happy to use as referrals?
· Are they a member of the International Business Broker’s Association (IBBA)?
For a very strong sign, ask if they are a Certified Business Intermediary (CBI), which is the strongest and most trusted rating for business brokers.
Some individuals or companies that are not legitimate have actually gotten quite good at passing themselves off as the real deal. As a general rule of thumb, if something feels off about the transaction, move on and look for a new online business broker.
3. How many active Listings do They Have?
Check the broker or agency’s website to see how many active listings they have – this means how many online businesses they are trying to sell at the moment. A lack of active listings is not a good sign, but conversely, if there is a huge number of listings on the page, it also means that the broker either accepts any client that comes their way or they are not able to focus much of their time and effort on a single listing. Around four to seven active listings per broker is a good and manageable number, and you can be assured that the broker will be able to allot the proper time and attention to your needs.
4. How big is their professional network?
The bigger the professional network of an online broker, the better chance they have of matching the right seller with the right buyer. Just like the number of active listings, brokers who have little to virtually no professional networks mean that they are new to the business or there is something wrong with their working practices that they have not been able to create business relationships. On the other hand, a broker who boasts of a “huge network” with a very high number often means they use a generic mailing list. Brokers who are part of the IBBA generally have strong and extensive professional networks that you can benefit from.
5. How much experience do they have?
Ultimately, you need an eCommerce business broker who has both knowledge and experience under their belt. They should be able to match your needs as a buyer with the needs of a business owner as a seller. They should be able to gauge the value of an online business in terms of how it can be an asset to you if you purchase it. You might also want to consider what type of experience an ecommerce broker has; an ecommerce store selling clothes will have a different business model and market than a company that conducts pest control services. Make sure that find an ecommerce business broker who has experience managing similar transactions successfully.