Five dirty secrets online business partners usually hide
Five dirty secrets online business partners usually hide. There is no doubt that when investing in Internet business, the buyer wants to know absolutely everything about it. However, there are always nuances that sellers would prefer not to advertise.
Unpleasant surprises do not overshadow the post-factum purchase. This article has collected several essential factors that unscrupulous market participants selling online projects can intentionally hide.
1. How long does it take to do marketing?
When studying a particular proposal, it can be challenging to understand. How much time the future owner will have to spend on the business.
Sellers understand the real level of involvement in the project. However, nothing prevents them from specifying the fewer hours it takes to run a particular online business.
The fact is, we do not know how much time. We need to devote to a potential investment until we are fully involved in it.
However, there is an easy way to make a rough estimate of how long it will run a business.
It is necessary to ask the seller in the most meticulous way about all the processes. That ensures the Internet project’s stable operation and write them down in detail. It is worth proceeding from common sense and making sure. That the order and sequence of actions of each process do not have logical “failures”.
Having made a complete picture of how and what is happening in the company. It is necessary to highlight those operations. Where the owner is wholly or partially involved. Further, try to evaluate each operation as realistic as possible in hours.
Simultaneously, when evaluating the working time. It is necessary to consider the next moment – in the initial period of managing a new business. The efficiency of task performance will be lower, and time costs will be higher.
2. Hidden costs
Every business is unique. It takes much time to understand how it works and what are the costs associated with its functioning. Therefore, the owner, who puts his brainchild for sale. Does not find it difficult to “accidentally” forget a couple of lines of expenses. That can radically change the enterprise’s economy.
Undoubtedly, every business model within which an online business operates has a particular. One might even say standard, set of cost items.
For example, suppose this is an online store operating from its warehouse. In that case, its P&L report (income and expense report). Must necessarily reflect the costs associated with the warehouse and logistics. If the phone number 8-800 is indicated on the website of the business being sold. Then the same document assumes the presence of costs for IP telephony.
How do you know if your list of expenses is accurate?
Establishing 100% of business expenses is not a trivial task. To understand what resources are required to provide, say. A certain level of traffic or other processes, You needs to know well the specifics of a specific business model.
To take into account the bulk of the nuances. As an option, you can seek advice from those entrepreneurs who have accumulated sufficient experience in this area. You can find them in specialized communities on Facebook or specialized forums.
Also, for accounting and cost analysis, it is never superfluous to apply a common-sense approach. All that is required of you is consistency, attention to detail, and the ability to ask questions.
For example, let’s take an online store where e-mail marketing generates 20% of sales. It is relevant to ask the following proposals:
- What e-mail program is used for mailing? How much does it cost per month?
- Who makes the letters – prepares the content plan, writes the texts, does the layout and design?
- How much do performers’ services cost?
- Have you implemented trigger e-mails like abandoned carts? How is the shipment carried out – by a third-party service or on your own? If a third-party service – how much does it cost?
- How is the subscriber base gained? Are there any costs involved?
And so on.
3. Return and failure rate
An essential point that business sellers prefer not to talk about is the percentage of returns and refusals from buyers. To a bigger range, this applies to online stores.
The buyer’s job is to figure out the exact bounce and return rates. It will give an idea of a given business’s service level and the quality of the services and goods. To find out these values. You need to compare the number of orders or orders made with the number of successfully closed deals.
The owners of the businesses being sold offer. As confirmation of the successful operation of the project, guest access to the administrative part of the site. Where the buyer can make sure that there is a constant flow of orders.
However, do not forget that all data under the control of the seller can be easily edited. Therefore, it would be a mistake to consider them a severe evidence base for assessing the company’s profitability.
4. How healthy is the competition?
Another thing that site owners do not like to discuss is the degree of competition in this niche. Firstly, the business owner must know his competitors and. The quality of their product, because you cannot develop a project without paying attention to other market players. If he cannot answer questions about the competition, this is a reasonably good reason to refuse further communication.
There may also be an option when you are convinced that they are one of a kind and that they have no competitors at the moment. Which again will be a trigger for refusal of cooperation because there is always competition. Though direct, though indirect, it is. The point is again an insufficient level of awareness.
That is why I encourage you to ask questions and find out. Who is the competitor for the project you plan to invest in and? How robust their business and brand are.
By doing proper market research, You will be able to draw some conclusions about. How valuable a business is compared to its competitors.
5. What went wrong? And why?
Chances are, the business owner himself will not tell you about why his business failed. His goal is to sell his project successfully, showing it in the most attractive light. However, in reality, businesses, like people, always keep some secrets.
Your task is to show diplomacy and perseverance. Try to build your communication so that the owner is frank with you. And tells you in detail what key competitors exist on the market and. How people are better and more successful than the business being sold. So you can fix and try to repeat the recipe for their effectiveness. If you decide to invest in the project.
Also, be sure to ask the seller what he would change and optimize it to improve its performance. It will allow you to learn many useful things about the company’s development in the future. If you want to invest in it.
However, it is advisable to independently analyze all the information provided and conclude. Whether these measures will solve the problems or mask the project’s serious problems.
Suppose such difficulties exist, then even before the purchase. In that case, you need to decide for yourself. Whether you are ready to deal with them as a new owner or not.
Read my more article: Five easy ways to identify scammers. When improving your website