Why build when you could buy?
My tribulations trying to buy an online business
I’ve been willing to buy a business online for the past few years.
I didn’t succeed yet for a few reasons:
Lack of patience
Vague or non-existent criteria
Clumsy search process
Low budget
My wife and I are looking at buying something in the next months and we’ll change a few things to get there. We bought an Acquire.com subscription a few days ago, and we started talking to a few people already.
But let’s get into what we learned from our past research and conversations with business owners in the last few years.
Lack of patience
My biggest expectation reset was the time it would take.
When I’m looking at building something, I’ll think it’ll take X amount of time with an icing of uncertainty. “It might not work at all and be wasted time”.
The logical thought is that buying something will be pretty instant, and not much effort will need to go into it. Also, the main risk is reduced because the business already generated revenue and profit.
But it takes time because there’s a learning curve to finding, vetting, and selecting businesses, just as there is one with building a product or selling a service.
It sounds trivial, but everything has a cost. The question is which one I am willing to pay for which rewards (and, most importantly, which probabilities for which rewards).
Takeaway: We’ll be okay going through many assets, knowing a lot of conversations will lead to a “No”. We also might have to wait for more assets to come on the market.
Vague or non-existent criteria
At first, I went into it with loose criteria, such as buying something between $1000 and $2000 in an industry I resonate with.
I didn’t realize that it takes time to discover what I want to buy and identify how my skillset can grow an asset.
So I was looking at e-commerce, content website, marketplaces, products, SaaS. Really, everything and nothing.
Takeaway: Focus on games or content websites. If it’s a content website, we’ll look for something related to our hobbies or things we enjoy (climbing, biking, singing, no-code, project management, coding, etc.)
Clumsy search process
At my previous budget ($1000-2000), I looked mostly at Flippa because there was a ton of choice. Nowadays, I have roughly a dozen places I can check out to find assets. Although, they almost always ask you to buy a premium subscription to talk to the sellers. We went with Acquire.com because we feel that’s the place with the most assets.
But most importantly, what I overlooked is the pipeline. I selected a dozen assets and talked to a few owners. I would get disappointed by the conversations and get discouraged when it turned out the asset was not what I expected.
But it’s a funnel like everything else. If I select or save 100 assets, I might want to do more research on 20 of them. I might send a message to 10 sellers to which half would be ignored. So we might do due diligence on 5 or so assets.
I didn’t crunch the numbers and take it seriously enough to realize I’d have to go through many assets and have some conversations that would lead to nowhere.
Takeaway: Lead the process with reason, not emotions. Expect that we’ll need to go through a lot of volume to find the one we’ll buy.
Low budget
We were looking at mostly Flippa for a few thousand max. Let me tell you, the options are limited, and it feels like looking at websites from the 2000s at the beginning of Web 2.0.
Most of the assets at that price point look terrible, sound like scams or are probably something you could do yourself.
Takeaway: Either build it yourself or raise the budget.
Other things we’ll keep in mind
Be okay with losing all the money. I’m more optimistic than my wife but I believe it’s the right expectation to have. Buying an asset reduces the risk but doesn’t suppress it.
Good feeling with the seller. Obviously, it’s a larger amount of money, so people might try to scam. But more than that, I want it to be a good experience. So if something’s off, we’ll pull the plug.
Build a growth plan. It’s something I overlooked before but we won’t buy an asset unless we have a solid plan to grow the business.
Back to you! Have you ever considered or tried buying a business? How did that go?
Blog Spotlight
Antonio Tropiano and I connected over freelancing in a Discord community. We’ve grown together in our freelancing practice in the past year. In the coming months, he’ll stop freelancing to focus on building products. What I like about his blog is how open he shares his numbers and though process. Follow his adventures on his blog here.
3 juicy links of the week
Going from 0 to 1 (building) and growing a business are two different skillsets. Andrew Pierno has built 40 products, sold a few and bought some businesses too. In this interview, he goes over the difference between the two.
An awesome breakdown of how to find a business to buy for people serious about it.
A free course on how to buy, grow and sell startups
I started watching this course, and the information is very accessible and comprehensive for someone just starting on that journey!
If you want more, here’s what I got for you
A 1-hour course to help you kickstart your independent life. It’ll show you how to get from 0 to $1000 on Upwork. Upwork is one of the easiest ways to get your first wins and earn your first $1000 online.
Definitely interested to hear more!