Looking to become your own boss without starting from scratch? Buying an online business could be your path to entrepreneurship.
While launching a new venture takes years of testing and building, acquiring an existing business lets you skip the risky startup phase and jump straight into running a proven operation.
From e-commerce stores and content websites to SaaS platforms and digital services, the online business marketplace offers diverse opportunities across different industries and price points. Let’s see what these are.
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Types of online businesses
Let’s break down the main types of online businesses you can consider purchasing, based on my experience both as a buyer and advisor.
E-commerce businesses
E-commerce remains one of the most popular online business models. These businesses sell physical or digital products through platforms like Shopify, Amazon, or their own websites.
For instance, MVMT Watches started as a small Shopify store before being acquired by Movado Group for $100 million. You’ll find opportunities ranging from niche dropshipping stores to established brands with their own inventory.
Content and media websites
Content websites generate revenue primarily through advertising, affiliate marketing, or paid subscriptions.
Taking Wirecutter as an example. The product review site was purchased by The New York Times for $30 million. So, you can consider these types of sites when buying an online business.
Software as a Service (SaaS)
SaaS businesses provide cloud-based software solutions on a subscription basis. While they often require technical expertise to manage, they offer predictable recurring revenue.
Mailchimp, which started as a small email marketing tool, grew to a $12 billion acquisition by Intuit. You can find smaller SaaS businesses selling for 2-4x annual profit.
Online marketplaces
Marketplaces connect buyers and sellers, earning through commissions or listing fees. Etsy is a prime example, but you can find smaller niche marketplaces like Reverb (musical instruments) or StockX (sneakers and collectibles).
Start by evaluating which model aligns with your skills and interests. For example, if you have experience in e-commerce, managing an online store might feel more natural than running a SaaS business.
Why buy an online business?
Purchasing an existing venture can be more advantageous than starting from scratch. Let me share the key benefits that make this path attractive.
Immediate revenue and proven model
When you buy an online business that’s already operational, you’re investing in a venture that generates income. You skip the uncertain startup phase and step into a business with proven market demand and revenue streams.
Existing customer base and traffic
Starting a new business means building an audience from zero. Established businesses come with existing customers, email lists, and traffic sources. And it’s easier to grow a business that already has a customer base.
Shorter learning curve
When buying an existing business, you get access to valuable data about what works and what doesn’t. The previous owner’s experience becomes your shortcut.
For example, an existing business would already know which products sell more than others. So you can invest more in high-selling items and avoid loss from low-selling products.
Easier financing options
Banks and investors often feel more comfortable financing the purchase of an established business with a track record. I’ve seen online businesses with two years of steady profits secure financing at better terms compared to startup loans.
Remember, while these benefits are compelling, success still depends on your ability to maintain and grow the business. Always conduct thorough due diligence before making a decision to buy an online business.
How much does an online business cost?
Most online businesses sell for a multiple of their annual net profit (also called seller’s discretionary earnings).
This multiple typically ranges from 2x to 5x annual profit, depending on various factors like business type, age, and growth trends. For instance, a content site making $50,000 annually might sell for $125,000 (2.5x multiple).
E-commerce stores
E-commerce businesses usually command multiples between 2x and 3.5x annual profit. However, stores with strong brands and proprietary products can fetch higher multiples.
Content websites
Content sites typically sell for 2.5x to 4x annual profit. Sites with diversified traffic sources and steady growth often command higher multiples.
SaaS businesses
Due to their recurring revenue model, SaaS businesses often fetch the highest multiples, ranging from 3x to 5x annual profit. If you want to buy an online business in SaaS category, you’ll need a bigger budget.
Service-based businesses
Digital service businesses usually sell for lower multiples, typically 2x to 2.5x annual profit, due to their reliance on personal relationships and hands-on management.
From my experience, first-time buyers should budget for additional costs beyond the purchase price. Set aside at least 10% of the purchase price for transition costs, potential improvements, and working capital.
For example, if you’re looking at a $200,000 business, plan for at least $20,000 in additional funds.
How to buy an online business
Whether you’re a first-time buyer or a seasoned entrepreneur, understanding how to evaluate, purchase, and transition an online business is crucial for making a sound investment.
Plan your acquisition goals and criteria
Before diving into business listings, take time to define your goals and the criteria behind your decision to buy an online business.
I’ve seen buyers waste months looking at unsuitable businesses simply because they hadn’t clarified their requirements upfront.
Start by determining your ideal level of involvement. Do you want a passive investment that requires 5-10 hours weekly, or are you ready to work full-time in the business?
Next, establish your financial parameters. Beyond the purchase price, consider your monthly income goals. Create a criteria checklist including:
- Investment range (including working capital)
- Minimum monthly profit
- Time commitment (hours per week)
- Required skills and expertise
- Industry preferences
- Growth potential
- Seller transition period needed
Use this checklist to evaluate every opportunity. Consider creating a simple spreadsheet to score potential businesses against these criteria.
Find online businesses for sale
There are several reliable channels for finding quality opportunities. Online marketplaces serve as the primary source for most buyers.
Empire Flippers specializes in vetted businesses typically selling for $50,000 to $2 million, while Flippa offers a wider range including smaller sites starting at $1,000. Quiet Light Brokerage focuses on larger deals, usually $500,000 and above.
Another option is business brokers. They can provide access to off-market deals and valuable guidance. They’re particularly helpful for first-time buyers.
You can use direct outreach to uncover hidden opportunities, too. Think about the websites and businesses you admire in your target niche. Then contact to see if they’re interested in selling.
Joining Facebook groups like “Flipping Websites” and “Digital Business Owners,” or setting up Google Alerts for “[your niche] + business for sale” could also be useful.
Conduct preliminary research
Before reaching out to sellers to buy an online business, conduct thorough initial research to avoid wasting time on questionable opportunities.
Study the business metrics carefully. I once spotted a red flag when a Shopify store claimed $50,000 monthly revenue but showed only 1,000 monthly visitors – the numbers simply didn’t add up for their average order value.
Check the business’s online presence. Tools such as Ahrefs can give a detailed report to help analyze the organic traffic of a website.
For a content site I recently evaluated, Ahrefs showed their traffic dropped 40% after a Google update, despite the listing claiming stable traffic. For e-commerce stores, examine their social media engagement and customer reviews.
Analyze the competition and market trends. When considering a pet supplies store, I discovered three major competitors had entered the market in the past six months, indicating increasing competition.
Contact potential sellers
Keep your first message brief but informative. Introduce yourself, demonstrate your knowledge of their business, and explain why you’re a serious buyer.
In my experience, sellers respond better to messages that show you’ve done your homework rather than generic inquiries.
Be transparent about your timeline and funding status. I know someone who lost a great opportunity because they didn’t mention their pre-approved financing until later in the discussion, after the seller had already committed to another buyer.
Not sure what to say on first contact? Here’s a template you can use:
Hi [Name], I’m interested in your [type of business] listed on [platform].
I have experience in [relevant background] and noticed [specific observation about their business]. I’m particularly impressed by [genuine positive aspect].
I have [funding status] and am looking to complete a purchase within [timeline]. Would you be open to a brief call this week to discuss the opportunity?
Best regards,
[Your name]
Conduct due diligence
Before buying an online business, it’s essential to get detailed information from the seller and conduct due diligence. Think of it as doing your homework to make sure you’re getting a good deal.
You want to understand the business’s history, finances, and operations. Start by analyzing the financial statements. Look for consistent revenue, profit, and expense patterns over the past few years.
Make sure to verify these numbers with bank statements and tax returns. If the business uses Shopify, for instance, check the sales data and customer reviews.
Next, assess the website traffic and SEO performance. Tools like Google Analytics and Semrush can help you analyze traffic sources, bounce rates, and keyword rankings.
For example, if you’re considering buying a blog, make sure it ranks well for relevant keywords.
Investigate the business’s legal standing. Ensure there are no pending lawsuits or outstanding debts. This might involve reviewing contracts, licenses, and intellectual property rights. If you’re buying an e-commerce site, check the supplier agreements and inventory levels.
Also, understand the customer base and market position. Ask about the customer demographics, retention rates, and feedback.
For instance, if the business sells fitness products, find out who the regular buyers are and what they think about the products.
Make an offer
Research the business thoroughly and determine a fair price. This might involve using valuation tools like Empire Flippers’ valuation calculator. Consider factors like revenue, profit margins, and growth potential.
Next, draft a Letter of Intent (LOI). This document outlines your offer and terms. Be clear about the purchase price, payment terms, and contingencies.
For instance, if you’re buying an e-commerce site like CraftyHacks, specify any inventory or supplier agreements included in the deal.
After submitting your LOI, negotiate with the seller. Be prepared to discuss terms and make compromises. Use tools like Zoom for virtual meetings and DocuSign for electronic signatures.
Close the deal
Closing the deal to buy an online business is the final step in your acquisition journey. Once you’ve agreed on terms, draft a purchase agreement detailing the sale’s specifics.
Ensure you include clauses covering any contingencies. For example, if buying an e-commerce store like PetProSupplies, specify if any ongoing supplier contracts are part of the deal.
Next, perform a final review. Verify all information provided by the seller, including financial records and legal documents. It’s wise to consult with a lawyer during this phase.
After that, finalize the payment. This might involve using escrow services like Escrow.com to ensure safe fund transfer. Once the payment is confirmed, the business’s ownership is officially transferred.
Final thoughts on buying an online business
Buying an online business can be a rewarding investment if you approach it carefully. Start with thorough research and due diligence. Understand the financials, customer base, and market position.
Making an informed offer and negotiating terms are crucial steps. Always seek professional advice to navigate legal complexities.
Closing the deal requires clear terms and a secure payment method. Take your time and don’t rush. In my experience, patience and attention to detail pay off.
Ultimately, buying an online business is a journey that demands preparation and foresight. Follow these steps to increase your chances of success.
Did I miss anything? Did you try these tips to buy an online business? Do you have any questions or comments? Share your thoughts below in the comments section.
