It's essential you're clear about what you are looking for so that you can quickly identify a good fit when you come across it. Bear in mind that if a business is a good fit for you it's likely a good fit for someone else too. You're not operating in a vacuum when reviewing these opportunities, so it’s important to be able to make an initial evaluation and decide then and there – not whether you are going to buy, it's way too soon for that, but simply "Am I interested enough to want to know more about this business?" If so, you need to be able to put together a list of further questions you need answered in order to know if this is a business you would like to own or ask more questions about before you “do it -or- drop it”.

 

You should take some time right now to figure out and address the criteria you really want in an online business. Do this in writing [a Word doc- set up as a table with Questions on the left Answers on the right works well for me] use it as a checklist when reviewing all businesses if they meet your criteria or most of them, then submit other clarifying questions to the broker/seller. Review the broker/seller responses and make a decision to continue to pursue or withdraw [do it -or- drop it - you seeing the pattern here?]. This is not a process that can, or should, take more than a day or two, any longer and you are letting those who are swift and nimble [mostly meaning - better prepared] pass you by and snap up the best businesses from under you. If you know what you're looking for this process becomes much faster and easier, you know what you need to know or you ask more questions until you have a clear picture of the business as it exists today, then buy or bolt – it either makes sense or it doesn't

 

 

 

 

 

3.      Min Cash Flow: This should reflect on where your price range is set – in today's market an average business should run somewhere between 2 to 3 x net income [cash flow] depending on several other factors too though

 

4.      Preferred Product or Service types: This should be products, services or businesses that you feel would hold your interest and are sustainable in today’s economy preferably with the widest appeal

 

5.      Preferred Delivery Method: Digital/Drop Ship/Direct Ship – these will affect the amount of time, space and additional cash required [for inventory] and also the amount of effort it will take to run the business

 

6.      Number of Hours to Run: This should be the number of hours you REALISTICALLY can afford to dedicate to running and operating the business – to include time for sales processing & shipping, marketing, SEO, website maintenance and book keeping

 

7.      Special Skills or Experience Required: What skills do you have/need or can outsource or learn quickly and easily in order to run the business effectively

 

8.      Business Structure: Would you need to get a business license? Are you willing to consider franchises or licensed business opportunities?

 

9.      Transferability:  How easy and simple will the transfer and training be – where and how will you do training? – Your location or the sellers – will there be additional costs associated with travel if needed to complete training offsite?

 

10. Financing: If you are going to need financing be sure you have your loan pre-approved and keep all documents updated [monthly] and close to hand ready to resubmit the minute you have an offer accepted. Waiting on loan approval or contingencies for financing can cause a seller to choose another offer over yours. If you can provide a pre-approval letter then the seller knows you are serious and the only thing that remains to be underwritten is the business itself.

 

 

Do not try to buy a business unless you are certain you can carry the debt service [repayments in addition to normal monthly expenses of the business] that you will need in order to finance the purchase. ALWAYS submit your loan application with a full 12 month sales forecast and projected budget or P&L statement, together with a detailed marketing plan.

 

If you need help with these documents check our document resource page or Contact us and we will provide examples for you. You can also contact your local SCORE [Service Corps of Retired Executives] office they will be in the phone book or you can look them up online at www.score.org if you need help with planning for your new business. Their services are free and they often have very skilled and knowledgeable volunteers. Although they may not always have experience with web based businesses – having a business with a website is very different from having a web based business.

Business Plan: If you need a business plan outline check our document resource page or Contact us and we will provide examples for you.

Personal Financial Statement: Any bank will require you complete one of these if you haven’t already. I believe SBA has their own form you need to complete if applying through their guarantee programs. You should have one completed and stored electronically [as a PDF] so you can submit along with an LOI [Letter of Intent] especially if you are asking for seller financing.

 

 

If you complete the steps on this check list, and I would set it up in table format on a word doc with space for you to add notes or comments as you evaluate an opportunity then simply complete and save for each business as you inquire. Go down the checklist, see how many of your criteria the business meets and then evaluate if you can make changes – major or minor to meet the outstanding criteria if so, then that should be the right business for you.

 

You will need to understand, RARELY, will you find a business that meets ALL your criteria, you may well have accept “close” and make some compromises, but this is the process I go through when I evaluate a business for purchase or development.

 

 

Check out our other posts on Buying and operating an online business. Comment or ask your own questions below and follow our team on Twitter @NextGenBizTools to get leading edge tips, tools and tactics for your online business.