When we hear reference to the word “sustainability” in business terms, it often refers to the company’s ability to manage its energy use, contain its carbon emissions and generally act as a good neighbor within society as a whole. We can unveil a whole new interpretation of the word, however, when it comes to the concept of buying an Internet business for sale. There are an increasing number of opportunities available to the entrepreneur these days as the Web becomes such a critical part of all of our lives. As more and more business is conducted via the Internet, expect to see an increasingly sophisticated array of Internet businesses available for purchase. It’s very important to understand however that business conducted over the Internet is essentially “virtual.” This is not a bricks and mortar operation and you may find it rather difficult to come up with a conclusive value. There are few benchmarks to refer to, either, as this business arena can be very dynamic. If you’re purchasing a restaurant for sale, you could often refer to averages and certain accounting ratios to help you figure it all out, but in terms of purchasing a website for sale, you may have to be a lot more creative when assessing its ultimate value, for you.
Take a cold, hard look before you buy a business such as this, and ask yourself exactly what it entails. Does it have a particular hold on any niche area; does it feature specific and more tangible products such as extensive content, for example? Are there loyal clients, and what methods of marketing are typically used to solicit them? You have to be able to see some depth and substance here and more importantly, there has to be a clear path ahead. Continuity and sustainability are your buzzwords, as you conduct your due diligence process.
More often than not, when you purchase website business assets, you are buying the creation of one particular person, the seller, and you must be careful that its continuity is not disrupted, nor the overall marketability of the business, when the seller departs. The whole thing could be linked to the personality of the seller. What if it revolves around some of the seller’s specific, maybe significant skill sets, without which it would not work? Maybe the seller will be willing to help you going forward, but you must be very wary of this as well. How are you going to come up with a noncompete? In a typical noncompete agreement, a geographical restriction is fairly easy to enforce, but in the world of the Internet, somebody can be virtually invisible and still have a successful operation. Think what would happen if the outgoing seller simply started again, with a third-party and effectively set up in opposition to your work.
It’s absolutely essential to engage the services of competent, legal counsel in this area to design a bulletproof agreement for you. The best approach may be to apportion some of the purchase price, so that it’s tied to the non-compete agreement. In other words, you will design a “note” allowing the release of funds over time, as soon as it’s evident that the seller is in compliance.
Richard K. Parker –
About the Author:
Richard Parker is the author of the How to Buy a Good Business at a Great Price series. As President and founder of Diomo Corporation – The Business Buyer Resource Center, his materials, seminars and consulting have helped thousands of business buyers realize their dream to buy a business. Want to find out more about business buying strategies that really work, then look no further than=> http://www.diomointernet.com