Marco Schwartz
About
My image

3 Mistakes to Avoid When Buying Online Businesses

Last Update: Thu, Aug 10 2023

Buying an existing online business is not an easy decision, as it usually involves a significant amount of money. Therefore, you really want to avoid any mistakes that you could make when purchasing an online business, especially if it is your first purchase. Here are 3 mistakes that I made myself and that I wanted to share with you so you can avoid them in the process of buying your next online business.

Buying on the wrong platform

When I first started to look for an online business to acquire, I looked over the web to find a good platform where I could see many websites to purchase, and select one to buy. I quickly found Flippa, and it had the largest selection of websites available to buy, and also in a wide range of different businesses: affiliate reviews sites, eCommerce businesses, mobile apps ... I settled on a small eCommerce site that was doing about $200 a month, for a price around $2000 which was quite cheap. Even if it performed well during the first months and even managed to raise the revenues of the site, the traffic quickly fell and I could never recover it, and after a year decided to just drop this site.

My mistake here? Not choosing the right platform to purchase a site. So to be clear, I have nothing against Flippa, and I am sure you can find some good deals there. But it's just not what you want to buy a solid online business (especially for a first acquisition), as the deals on Flippa are largely non-vetted. This means that they just do some automated verifications (like the number of visitors via Google Analytics), but most of the numbers of the business are not verified by an actual person. The businesses sold on Flippa are also usually quite new, which means less stability than an online business which already has some years of track record.

The solution here is to really use a platform that does a good job of vetting online businesses, to make sure you are buying a real online business where all numbers have been verified by an actual person. For that, I recommend platforms like Empire Flippers (where I bought most of my businesses) and FE International.

Not doing your own due diligence

The second mistake that you should really avoid making is not doing your own due diligence. Even if you are using a platform that is doing an excellent job vetting online businesses, you still need to do your own due diligence work to make sure the site is the right one for you and align with your own goals. One example of this mistake was when I purchased my first site. The platform where I bought it from did an excellent job vetting the site and verifying all the numbers, but because I didn't do a good job to actually go deeper into the metrics of the site, I didn't see that most links coming to the site where actually from a PBN (Private Blog Network). Basically, a network of sites, sometimes owned by the owner of the online business to sell, that points to the website in the hope to boost Google rankings.

I have nothing have PBNs in general - but it's just not the strategy that I want to use on any of the site I acquire, as Google doesn't like that and can penalise your site anytime. And of course, this is what happened, and six months after the purchase rankings started to drop significantly. I managed to recover from this, but if I had done a better due diligence I could have easily avoid this issue.

That's why you should always do your own due diligence - and I really recommend having a document that you always use to check all the metrics of an online business to make sure it corresponds to what you want. To help you with that, I created a free due diligence checklist that you can use for your acquisitions, and that you can find here.

Trying to find reasons to buy a site

Finally, another mistake that I did was to try to find reasons to buy a given site that I was interested in. It's human: we find something that we like (based on emotions), and then we try to find rational reasons to be convinced that it is the right decisions. Even if this is ok for some small purchases, that's something you should absolutely avoid when purchasing an online business. I did it too with my first site: I really like the overall site and the niche it was in, and then looked in the numbers to find some key metrics that were supporting my initial impression.

Again, don't do that. You should actually do the exact opposite, and find reasons to NOT buy a given site. With a good due diligence checklist, your job is to go through all the points and see how to disqualify the site you are currently looking at. If you still didn't disqualify it at the end, then it's most probably a good purchase. Again, to help you out with that, you can grab my own due diligence checklist for free here.

That's already the end of this article! I really hope it will help you to avoid those mistakes when buying your next (or first!) online business, and if you are thinking about other mistakes to avoid please share in the comments!

Want to learn more about investing in profitable websites?

Choosing the right website to buy is the most critical part of investing in profitable websites.

That's why I put everything I know into a single step-by-step due diligence checklist that you can get for free by clicking on the button below: