Buying an Online Micro Business for the First Time? Here’s What You Need to Know
Buying your first micro business is like getting married — It helps to have fumbled around finding the sweet spot before you sign the paperwork. Unlike marriage, doing it over and over is actually a lot of fun and will make you richer, not poorer, provided you know what you’re doing.
If you’ve already found that sweet spot, it’s because you’ve skipped meals, relationships and entire weekends tinkering with side projects, dropping the ball in sandbox mode and screw things without birthing future-wrecker problems you can’t solve.
Know What You Buy, Buy What You Know
That sweet spot feels different for different people.
Makers with a flair for apps or SaaS products know how to find the niche between niches and solve problems potential customers didn’t even know they had. Those with a knack for SEO-optimized website builds might find the sweet spot for scaling AdSense, Amazon KDP, Amazon FBA, Amazon FBM, Amazon Merch or Amazon Associates revenue — you get the idea.
You’re going to be wowed and dazzled by the glittering lights of some sexy-looking businesses that’ll put dollar signs in your eyes, so make sure you know exactly what you do and where you fit into the ecosystem. It seems obvious advice, yet it’s all too easy, as a first-time buyer, to waste time kicking tyres of business types you’re not qualified to drive.
Knowing what you buy and buying what you know will set a laser focus that’ll harden you against distraction. It’ll also close the gap between where you are and where you want to be to ensure you’re on the most efficient route possible.
Check if It’s Been in an Accident
Before you knew your shit, your shit knew itself better than you.
Your code would randomly work after pulling a lever you thought would break it. Of course, you lost track of which button you pushed that made it work.
Online products can function with spaghetti code or spaghetti operations swept under the carpet — just because she’s purring, doesn’t mean everything’s in order under the hood. Bad code has a bad habit of rearing its ugly head and causing trouble somewhere down the road.
When buying an online business, assume your seller also pulled the wrong levers at some point and make sure to examine the integrity of every last, miserable line to establish how willing they’ve been to fix things.
Have no hesitation in interrogating why the seller is selling and what they’d do to grow it had they continued — if they’re not able to demo how they would develop value, and how you can too, then flag it as a potentially high-risk acquisition.
If they can’t define the potential, it doesn’t mean it’s not worth buying, though it may reveal a need for a truckload of elbow grease and refurb that will need to happen before it’s roadworthy. If you do find badly fitted parts, you’ll gain leverage to negotiate on price, though you’ll want to have steadfast confidence in what you can personally do to beat the thing into profitability.
Due Diligence & Valuation
Being a maker-bootstrapper unmoved by the startup scene should give you a reason to rejoice — it means you’ll be turning the key and hitting the gas much sooner after what’s typically a more streamlined due diligence phase, pre-purchase.
Buying from people cut from the same cloth as you is a big advantage. On community-oriented marketplaces like IndieMaker, that’s more than likely to happen.
Better still, IndieMaker sellers that keep a tidy house will give you the lowdown on code, operations and finances quickly though it’s on you as the buyer to poke the right pressure points and ask the right questions.
Get Them to Justify the Asking Price
What method did they use for the valuation? What multiple did they apply? And make sure to negotiate downward if you spot reasonable concerns you think should be factored in.
When you’re 100% in, don’t wait around
Things move quickly in the micro-business world, so don’t hesitate.
After a light grilling, break cover with an offer once you know you’re all in so the seller knows you’re serious. That way you’ll have their confidence and encourage them to provide the important detail along with the next steps.
CAUTION: The cardinal sin of buying is getting flakey and not following through. Buyers that do this get known for it, so be sure that you’re sure, and follow through — otherwise you’ll struggle to harden a reputation as someone worth doing business with.
Lean on Someone Who Knows
Research what the seller has to be transparent about and make sure everything has been accounted for. If it’s a high-value IndieMaker listing, give us a nudge before you shake hands and we’ll help with final checks and IP handover.
Find maker blogs on how things broke down for others to avoid those pitfalls. If you get it right the first time, you’ll gain momentum and integrate new skills that will let you scale. Play a good hand and learn the tells — who knows — you could reach kung fu solopreneur level.