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Buying an online business is an exciting venture, but it can also be intimidating and overwhelming. As a potential buyer, you want to ensure that you’re making a sound investment and maximizing your chances of success.
One of the most crucial steps in the process is asking the right questions. By asking the right questions, you’ll get a feel for the business and the seller, so you can decide if it’s a good fit for you and how much the business is worth.
If the business is listed on a marketplace or through a broker, the listing or marketing materials may answer some of these questions. But if you’re buying the site privately and there’s no listing or marketing materials, you probably have access to less information unless you ask specific questions through due diligence.
Important Questions to Ask When Buying an Online Business
While you can get your questions answered by text (email, for example), I highly recommend a video call, if possible. Talking with the seller on a video call gives you a chance to get a better feel for them personally, which I think is essential when buying a website or small business.
It’s not just about the exact answers to the questions but how they answer them. You need to evaluate the seller just as much as you need to evaluate the website or business, and a video call is one of the best ways to do that.
With that in mind, here are some questions you can ask sellers.
1. Why Do You Want to Sell?
This is often the first question asked of someone selling a business. There are many legitimate reasons why someone would sell their website or business, and honestly, it can be challenging to know if the seller is telling you the truth. However, it’s still worth asking.
It’s an obvious red flag if the seller wants to move on because the business isn’t doing well or because they’re concerned about its future (unless you’re buying a distressed business and you’re well aware of the situation).
Most sellers aren’t going to tell you that they think the business has peaked, but if this question leads to a conversation, you may be able to put some pieces together and get a feel for the real reason, even if they’re simply giving the answers they think you want to hear.
2. What Is Included in the Sale?
When you buy a website or online business, you need to know what’s included in the sale. This can include things like:
- The domain name
- All of the content on the site
- All of the files that make up the site
- Email addresses
- Related social media profiles
- Other accounts (email marketing, analytics, affiliate programs, advertising accounts, etc.)
Of course, that’s just a basic list and many other things could be included.
It’s equally important to know what’s not included, if anything. For example, some affiliate accounts can’t be transferred. You need to know what isn’t included in the sale so you can determine how you’ll handle the transition and manage the site going forward.
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3. How Does Your Business Make Money?
If you’re evaluating a business, you probably already know the primary monetization methods. However, it’s helpful to get more specific details. For example, if a site is monetized with display ads and affiliate programs, what percentage of the overall revenue comes from each?
It’s also helpful to drill down into the data for some specific income streams. The seller may have financial statements that shed some light.
If the site is monetized with affiliate programs, you can ask the seller how that revenue is broken down into various programs. Is one affiliate program responsible for 100% of the revenue? If that’s the case, there’s a greater risk due to completely reliance on one program.
If the site sells digital or physical products, you should get a breakdown of the sales for each product so you can see the trends. The overall sales may be steady, but it’s possible that new products are constantly being added just to maintain the same level of sales.
4. What Are Your Top Traffic Sources?
Does the site have diverse traffic from several sources, or does it rely heavily on one traffic source? Historically, sites that got the vast majority of their traffic from organic search have been desirable to many buyers. But with upcoming changes and AI in the search results, sites with diverse traffic are more attractive than ever.
A site that gets all or most of its traffic from one source (regardless of the source) is at greater risk of a significant drop in traffic.
Knowing if the site relies on ads or paid traffic is also essential. This isn’t necessarily bad, but you must be aware of it so you have realistic expectations.
5. Who Are Your Primary Competitors?
Identifying competitors is helpful for a few reasons, including:
- You can compare the age and maturity of the business compared to competitors.
- You can compare traffic levels (especially search traffic, using tools like Semrush or Ahrefs).
- You can compare the quality of content and/or products.
- You can get ideas from competitors.
Start by looking at the most direct competitors, but you can also look at indirect competitors or those with a smaller level of crossover.
6. What Are the Strengths of Your Business Compared to Your Competitors?
Once you know who the competitors are, you can get an idea of how the business performs in comparison. How is this site stronger or weaker than its competitors? How is it differentiated? Are competitors monetizing their sites in the same way?
Asking these questions and looking at the competitors may help you to find growth opportunities. Or maybe you’ll see that competitors are much stronger and this site will have a hard time growing or improving. These factors may influence how you feel about the asking price.
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7. How Much Time Do You Spend Working on the Business?
If you’re buying a website or online business, it’s critical to know how much time the owner spends working on it and precisely what their responsibilities include. You need to understand what they do on a daily basis so you can realistically manage that workload or hire others to do it.
The amount of work needed and the specific tasks will impact how many people you hire and who you hire to run the site. Whether you use employees, contractors, or freelancers, higher maintenance requires higher expenses.
You’ll need to factor this data into your decision about the site’s value and what you’re willing to pay.
8. How Many Employees/Contractors/Freelancers Do You Have?
Knowing how many people are currently working for the business is essential, as it’s a reflection of the amount of work being done. It can also help you determine the level of expertise needed to keep things running smoothly and improve. Plus, it’s also crucial for budgeting and determining how much you’ll need to spend to keep the site running.
You should also ask about their current roles and responsibilities to understand what each person does and if any gaps need to be filled.
9. Will Your Team Stay in Place After the Sale?
An existing team that will stay in place is attractive to many buyers. In this case, the people currently running the business will continue to run it, taking some of the responsibility off of the buyer.
You’ll also need to know how much these team members are paid to determine if it’s feasible for you to continue after you take ownership of the business.
If no team will stay on board after the sale, you must be able to run the business or get others up to speed quickly.
10. Do You Have Standard Operating Procedures?
Standard Operating Procedures (SOPs) are important in any business, and they’re especially helpful when taking over a website or online business. SOPs explain the tasks involved with running the business and how they need to be done. They help ensure consistency and accuracy while making it easier for multiple people to work on the tasks.
Having SOPs in place will also save you time as you can quickly train new employees or freelancers on the basics of how tasks should be completed. They will also help you understand the details of running the business in the same way the seller has been running it.
11. What Are the Best Opportunities for Growth?
This is an important question because the seller has expertise and may already have ideas about improving the business. Sometimes the seller will have ideas of additional products that could be sold or more effective ways to monetize a website. They may know of untapped markets or opportunities for expansion.
Asking this question can help uncover growth potential you hadn’t considered before. And, of course, you can also use your own ideas to determine the business’s future.
12. Did You Build the Business from Scratch or Buy It from Someone Else?
This is important to know because you should have a basic understanding of the business’s history. If it’s changed hands several times, some complications may come up. For example, the current owner may not be completely familiar with the plugins used on the site because the previous business owner could have set it up.
These types of issues usually aren’t dealbreakers, but they can impact your expectations for the transfer process. Generally, a business with only a single owner will be cleaner and more straightforward than a similar business that’s been bought or sold a few times.
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13. Do You Use AI to Create Content?
This is a question that’s become important in recent years. More and more sites are using content generated by artificial intelligence (AI). Some AI content is high-quality, but a lot of it isn’t yet to the point where it’s as good as human-written content. And you need to know what you’re getting.
Google has said it doesn’t care whether content is created by humans or AI as long as it’s high-quality. With that in mind, you shouldn’t eliminate a site from consideration just because AI was used to create content, but you do need to carefully scrutinize the content (especially for content-based sites like blogs and niche websites).
You can also use a tool like Originality.ai to test and detect AI-generated content. These types of tools aren’t perfect, but they help gauge a site’s content.
14. Where Is Inventory Stored?
If you’re buying an e-commerce website or an Amazon-based business that sells physical products, you must understand how the seller manages inventory and where it’s stored. If it’s an FBA business, is inventory sent directly from the manufacturer to an Amazon warehouse, or is it sent to a third-party warehouse first?
These details are important because they impact the business’s costs and potential profit margins. They can also impact the amount of work needed to run the business.
If you have experience running other e-commerce or FBA businesses, you may have some ideas that can help streamline the process and improve profit margins or reduce the workload of running the business.
15. What Is the Return/Refund Rate?
Another question for e-commerce and Amazon FBA business sellers involves the percentage of sales that are returned and refunded. The return/refund rate can indicate the quality of the products or services offered, as well as customer service.
A high return or refund rate could mean customers are unsatisfied with the product or service. With some improvements, you might be able to decrease the return rate.
Final Thoughts on Questions to Ask the Seller Before You Buy a Business
Buying an existing business or website can be an intimidating process, but it doesn’t have to be. Asking the right questions will help you make a more informed decision and ensure that everything goes smoothly after the sale is complete.
If you want to buy the business, take your time, and don’t rush into anything. The questions covered in this article will help you uncover the details you need to make an informed decision.