Buying A Company At A Lower Cost

business
Did you know that 75% of US-based startups fail? It may seem scary but it is very common for upstart businesses to struggle. But from an investor’s point of view, this is a great opportunity to pick up small companies that have great potential for success.

This has been emphasized also in this interesting post from Statistic Brain, which states that 50% of those failed ventures are caused by “incompetence”. This basically means that the business in mind wasn’t really that bad, but the execution was not good enough. This means that for a business to be successful, there should be not just an “idea” but also the know-how to be successful.

Time To Get Started

You need to remember the four most important things you need to do to get your business started in the right direction.

Execution Plan – after buying the website, you need to know how you can make it profitable. What kind of advertising plan you want to use? Do you need a new content strategy, or perhaps a new monetization method? You should write all of these things down and make sure where you want your new business to go.

• Financials – of course before buying any website or business, you should know what your budget for it is. You also need to know how much it costs to have this business fully operational for the first few months. This is a very important point to consider even for certain businesses that have monthly revenue because what they are earning may not actually be enough to earn profits or even to cover the costs.

• Advisors – if you know that the previous owners or management of the business failed because of lack of knowledge and experience, this should serve as a sign that you should be prepared to make sure that you don’t fail as well. You could consider having a web developer or legal advisors and other experts to help you fill the void that the previous management lacked.

Competition – last but not least, be aware of the competition. Competition doesn’t only mean that you won’t earn profit; in fact, this also means that there is a demand for the business you have invested in. This is also an opportunity to gather information on how the competition does their business and how they earn profit. All this information could then be used and applied to your own business.

Sorting the Gems from the Rocks

Obviously, not every failing companies are worth buying at all. This is where Flippa can be very helpful. It can assist you in finding the best business to invest in with its powerful search options. They make it easier for you to find the website you want to bid on and you can even save search results and still receive new results directly to your inbox.

This example of a saved search helps you find potential gold mines using these parameters:

• Sites established 12 and 24 months ago
• Page rank of at least 1
• Minimum monthly traffic
• Small amount of monthly revenue

Of course you can also use your own parameters at flippa.com/search.

Bidding

If you’ve ever been in a bidding war, you know how competitive it can be especially if everyone sees that a certain website or business has great potential if given the chance to have a better management.
But thanks to Flippa, you can get the opportunity to be the first one to find a high potential failing business. What’s more, you can also negotiate with the seller for a Buy It Now price tag.
You can also offer the seller to end his listing straight away if you’re worried that other investors will outbid you. This is possible because most people are easily swayed with getting a quick buck without waiting for the end of the auction.

Anum

Anum Yoon is the founder and editor of Current on Currency. She loves all things personal finance, which is why you'll find her work all over the PF blogosphere.

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