Imagine owning a business with a huge upside, super low overhead and none of the day to day time and costly management expenses of your average bricks and mortar enterprise. Too good to be true? Often, yes.
If you approach the process like a get-rich-quick dream. A successful internet business does offer many advantages over traditional businesses, but not so much that you don’t need to know what you’re doing, or work just a couple hours a day. Buying the right web-based business could be the best decision you ever make.
However, if you don’t do it right, it could be an unmitigated disaster – the money you spend is real, after all. Here are seven of the biggest mistakes to avoid when entering the web business market.
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1. You buy into a market you know nothing about.
Danger! Danger! Danger! Many a new web business owner has been duped into buying a business through a good salesman preying on their lack of knowledge. The web seems sexy and attractive, but it’s a hugely competitive market. This means most business FAIL, just like offline businesses do.
It’s best if you are entering a market where you are both knowledgeable and passionate. It is also imperative that you do your research and look before you leap. Don’t be taken in by magnanimous people who want to teach you everything they know, and make you a turnkey business with no effort. Your success is always up to you.
Look at the business’s track record over a considerable period of time and track their results. Compare that to the performance of their main competitors.
2. You buy in on the way down.
This is another huge mistake: buying into a diminishing niche. The bubble has burst but nobody has told you yet. You are paying top dollar for sitting on top of the mountain, but the only direction your business is heading is down.
Research not just the company but also the market. Check out the social media sites, the forums, the industry magazines, the financial reports. What are they saying about the sector you are about to enter? A lot of great research is just a few clicks away in Google.
If it’s such a great opportunity then why is the vendor selling? Few people choose to unload healthy businesses. It just doesn’t make sense.
3. You think that there is minimal maintenance required.
Many a new internet business owner is duped into thinking that all they have to do is sit at home or travel the world and watch the money roll in. Sellers typically play down the technical maintenance requirements, possibly because the work is easy for them or maybe because they simply want to sell.
If you are told that minimal maintenance is required make sure you ask a few very important questions, and get a seasoned pro to review it with you.
What software and are platforms are involved and are they owned or under licence?
How easy will this be to maintain or develop further?
Often sellers offer technical support for “x number” of months, but what will prevent them from going AWOL on you? It pays to keep back a percentage of the sale price as a retainer for an agreed period of time.
4. Your new website traffic is controlled by another website.
You buy your new online business because the websites analytics show high levels of relevant visitors come to the website everyday. But unfortunately, a month into running your new business, the traffic has suddenly halved and you are beginning to sink. Why?
Do your research before purchase and look at the website’s traffic sources (use Google analytics, or get help). It is all too common to find that the majority of web traffic is coming to your new web business from another website or privately owned network, often also owned by the seller.
You are purchasing the customer base and the web traffic, so make sure you have full access to it, not some inflated numbers the previous owner used to prop up the site for sale. Your traffic sources should come from a diverse array of sources that will not suddenly evaporate, except for normal changes to market conditions.
5. It’s a new opportunity that no one else has tapped yet.
This is usually the cry of con artists and scammers and so be very careful.Although someone has to be first, there are usually numerous companies competing to be the leader in this new niche. If it is really that good then why are they selling? Why do they want a newbie on board?
Sellers playing this game will nearly always look for a buyer who is not an expert in this industry. Who doesn’t want to get in on the ground floor of something that is about to explode? You don’t, because it’s about to fall on your head.
6. The website code is cumbersome, complicated and inflexible.
Things move fast on the web and you have to be able to constantly adapt and grow if you are to maintain your position in the market.
For your web business to be flexible, the code behind your business must be well organized and written in a modern web language (code).
If you are not technical, it is imperative that you get a trusted web developer to look over the code before you buy. The cup may be clean on the outside but filthy on the inside.
7. You don’t trust your gut.
What does your gut say about the business and about the seller? Listen to it! At the turn of the last century (you know, like 1999) millions of people experienced “irrational exuberance” in the face of the first big dot com boom. We all know what happened. Real world economics brought them back to earth. Online business is like any other, just with a different set of tools. Don’t let your head drift in the clouds, when you’re gut is begging you to stay on the ground.
It’s entirely possible to do well online, even with limited experience. It’s also possible to lose your shirt faster than you ever imagined. Take your time, and be smart. Your investment in knowledge and hard work will most certainly pay off.