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Why Buy an Online Business?

We live in a world on the move, so owning an online business could be a great opportunity. Here we explain why.

The world is increasingly mobile, and increasingly international, which is why choosing an online business could be a sensible, and forward thinking, business move.

The main positive attributes of online businesses are that they’re relatively affordable, offer flexible working hours, don’t require a fixed office location, and benefit from continuous growth in online sales. Put all of this together and internet business opportunities offer a compelling and tempting prospect.

We talked to a number of web entrepreneurs about why they chose online businesses, so that we could give you our lowdown on the key benefits.

Work-life balance

When Maria Osbourne bought a website with her husband, the mother of two was attracted by the low barriers to entry, the modest upfront financial commitment, and, most importantly, the chance to work from home.

Maria says "websites are good for people with family commitments. Now if the children happen to be ill, I can sit them on the sofa with a blanket, pop in and check they're ok and have my lunch with them.”

Maria runs the business with her husband and their shared business allows him to be a hands-on dad too.  Maria explains that “the childcare responsibilities are divided equally. He takes the children into school in the mornings and I pick them up in the afternoon, so the children see as much of their dad as they do of me and that's great!"

New entrepreneur Daniel also wanted to work from home, and when he saw an online art gallery, he couldn't help but envision the opportunity for a less stressful life. His previous career was “hectic” and he wanted to “slow down a bit".

Daniel told us "when I saw the gallery website on BusinessesForSale.com, I thought that would be a much better option for me. It would be a slower start; I could take my time over it. It was cheaper than buying an actual art gallery and would also be less work". 

Affordable

Daniel managed to barter the original asking price for the gallery business down by more than 50%, from $31,000 to just $14,000 - giving him an established business for less than a used Ford Mustang.

Even after purchasing your business you can expect general running costs to remain low. Maria explained "in terms of day-to-day running costs all you're paying for is your phone line and broadband, and it's up to you how much you pay for advertising and promotion".

The basic requirements needed to run an online business mean that fixed overheads should start low and remain low.

Abhai Rajguru, who set up Alexander Rosse, an online accountancy and bookkeeping service, also recognized the benefits of having low startup costs, and, importantly for them, consistent cash flow.

Abhai explains that "being accountants, we're pretty good at building a financial model, so we were able to fund it ourselves. The way we're structured, the cash flow means we don't have a huge investment and that's one of the features of modern electronic businesses”.

Due to the low costs, you don’t need to borrow a lot to get started, which means you can think a lot more independently from the very start and start seeing profit much earlier. Buying an online business can be, relatively speaking, a much easier and stress free experience.

Relocatable & flexible

Daniel’s gallery business was originally based a long distance from his home, but this wasn’t a deterrent as the business was relocatable – Daniel could bring his company to him, rather than the other way around. For those that don’t want to compromise their existing lifestyle, and leave friends and family, for a new business – this is the perfect solution.

An online business also doesn’t demand that you do 9-5 hours; you can work in response to the business’ needs and your own personal commitments. This may mean that you have to work more hours on some days, but also means you can take time off whenever you view it as sensible to do so.

Popularity of online sales

Online retail and service provider businesses have been slow to take off in South Africa – however this industry is now picking up. 58% of computer literate adults shopped online over the past 12 months, amounting to an estimated total spend of R37.1bn.

Current customer spending patterns are bad news for shops, but good news for online businesses, as more and more people chose to shop online – for all goods, including essentials and luxuries.

Online sales continue to rise as high street shops and independent stores report ever declining sales figures.

And it is not just product sales that are benefiting from this online shift, but services too. Tourism and other service providers are now selling experiences and services through websites and apps.

Christopher Hill founded an online travel agent targeted at professionals aged between 27 and 38, a demographic group who use the internet heavily. "Because we were targeting young professionals, who tend to be rather web-savvy, we knew the internet was very important," explains the CEO of Hands Up Holidays.

An online business can also reach out to its target audience globally, and not just in its local vicinity – you thus have the opportunity to sell a lot more and engage new customers.  

Technological opportunities

Richard Stephenson runs a self-publishing website, and Gavin Wheeldon set up Applied Language Solutions, an online translation service.

Gavin told us that the main advantage, as far as he’s concerned, is the technical capabilities of online.  He told us; "the main thing is process automation. For example, you can now go on our website and get a tattoo translated into most languages for £6. It’s a massive advantage over competitors.”

"Prior to that, if someone wanted to go to an agency, they'd be paying at least £40 because of the sheer cost of inputting the order, the project manager finding the translators, and the management of the process."

"Now every step of that process is automated except for the human translation element. We're able to make a profit on £6, whereas the other agents are barely able to make one on £40."

Able to undercut the competition, Applied Language Solutions has unsurprisingly flourished and Wheeldon now presides over a company turning over £7.5m a year.

Other benefits

There are other benefits. For example, rather than needing to hire permanent staff (and worry about the associated responsibilities and costs), an online business can use highly experienced freelance experts from anywhere in the world to fill in any knowledge gaps or skill shortfalls.

Abhai told us "you can plug in outside expertise and pay for it as you use it, rather than having to buy huge IT infrastructures or premises and things like that."

Potential risks

Marcus Simmons, who set up an advertising website, warns that the innate advantages of internet businesses can lead to complacency.

"It's a double-edged sword: it's a low-cost start-up, but from a traditional business point of view your balance sheet and account can look weak because of the low-cost. So, the advantage can also be a disadvantage."

However alluring web opportunities are, tried-and-tested business principles still apply. You still need to do your homework on a prospective acquisition. You still need to approach it as a serious business opportunity and put in the necessary work to get it up and running and making a profit.

Conclusions

As with all business there is some risk, and website businesses do fail, however the lower financial risk means you can more easily dust yourself down and have another go.

Richard told us, get it right, and websites "can be very lucrative, and it doesn't cost as much money to set up compared to a bricks-and-mortar business."

He concludes: "The low start-up costs, having the option to work from home and the ability to reach a global customer base. There's never been a better time for people to start an internet business."



David Pottingham

About the author

David is a guest author for BusinessesForSale.com and FranchiseSales.com.

@FranchiseSales_

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