If you consider yourself as a risk-averse online entrepreneur, there is one way to progress in your entrepreneurial journey without dealing with too many risks: Buying an existing online business.
Indeed, you can cut through all the uncertainties starting up an online business and strategically acquire proven, growing an online business that features customer base, revenue, traffic and future earning potential.
Acquiring an existing online business is not a new thing; it’s been around for two decades. However, the number of acquisitions has risen significantly in the past few years, giving birth a new trend in online entrepreneurship: Instead of starting up an online business, entrepreneurs choose to buy an existing one that’s still early in its life cycle, but has created sizable assets and generated sufficient revenue to sustain future growth.
But why the trend emerges? Who drives the trend?
The why
The why, as mentioned above, is the elimination of early days’ challenges.
With 40 percent of new businesses fail within the first year, acquiring a business that has gone through this phase will reduce your risk of failure. The risk-to-reward is tipped in your favor.
The who
The primary drivers of the online business acquisition trend are notably new college grads and baby boomers.
New college graduates, especially those graduated from popular B-schools are well-equipped with the IT skills required to launch their own startup. However, due to the lack of access to fund early on, they need to either bootstrap their startups or acquire affordable online businesses. The latter is becoming more attractive, because of the factors mentioned above.
Baby boomers, on the other hand, have better access to funds; they are twice as likely to acquire a new business compared to their millennial counterparts. They usually eye on growing business that’s generated healthy profits, priced at 2 to 4 times the annual earnings. They spend a low six-digit, instead of millions.
Learn more
If you are fascinated in the growing trend and/or exploring the opportunities in online business acquisition, you can learn more about it from this infographic published by Quiet Light Brokerage.
Takeaway
Buying a growing online business is lucrative: You don’t need to deal with startup risks, as well as the hefty investment you need to make when acquiring an established business in its prime. In this case, for a relatively low investment, you’ll get the existing revenue figures and assets – plus strong earning growth potential.
Please note, however, just like any other entrepreneurial endeavor, buying an online business still pose a risk. However, the risk-to-reward consideration favors you, the investor.
That said, acquiring the right online business is crucial. You need to be able to assess the value of the online business, taking into account all metrics and analytics. You can DIY this, but contacting an online-business-savvy broker can help you to gain valuable insights.
The choice is yours. Good luck in your endeavor!