An Old Technique in New Clothes
We provide a number of basic tips in our original post about buying a business. While the Internet is a newer market, professionals have been strategically buying and selling brick-and-mortar businesses for decades. Important factors to consider when you start to get serious about buying a business apply to the web as well as the traditional business buying process.
As a quick recap, you should:
- Carefully choose your target acquisition, placing a priority on your personal interests and strengths, your beliefs about where the overall market is going, and your desire to find an undervalued opportunity.
- Once you have one to three potential candidates, you can start your due diligence, even before submitting a Letter of Intent since a lot of research on an e-commerce business can be completed from the outside-looking-in. Then if you like what you see so far, it’s time to go in depth to review Google Analytics, Google Webmaster Tools, revenue figures, vendor relationships, and more. Be sure to verify everything you are told, including little things often taken for granted such as registration on a domain name, and the size of a customer list.
- As you work through your checklists, make sure you receive documentation for everything you are relying on to make your purchase worthwhile. An important document in the Internet world is the non-compete agreement – you want to ensure you aren’t simply providing working capital for your next competitor.
As we noted in our earlier comment, each of these items is a post unto itself, so take the time to carefully choosing your e-commerce venture and do your homework when selecting your final candidate. This is a substantial investment whether you’re buying a distressed business or one flush with cash, so don’t hesitate to pull in seasoned pros for your team. This will help you make the wisest decisions and avoid future headaches.
Once you've signed on the dotted line, the real work begins. If you've never bought a business before, you’ll experience a range of emotions over your first venture. These include a sense of excitement and pride, as well as some fear and maybe a little feeling of being overwhelmed. This is normal, but you want to get down to the real meat of operations as soon as possible. Here are a few things to consider.
One of the added values of thorough due diligence in the pre-purchase phase is how much information the process provides about your company’s strengths and weaknesses. There will be some things you want to protect and nurture, such as your customer database. There will also be some areas you know need immediate attention, perhaps such as changing your hosting service to get better response times. Also, you will want to focus on adding capabilities and applying techniques that will help build your e-commerce site and ensure its future growth.
Here are some general categories to focus on during the first weeks of taking over. Again, many of these items will simply provide a more in-depth look at what you found in your initial due diligence.
- Competitive Analysis. You always want to know what your competitors are doing. Carefully review their websites, offers, and marketing programs. What keywords are they using and what does their meta data show you? Where are they getting their valuable backlinks from? Evaluate how are they ranked and set up a system for tracking their emails, paid search and other traffic-building activities.
- SEO Review. Whether you have an expert in-house, hire a solid agency, or follow the comprehensive website analysis we designed for this very thing, you want to critically evaluate exactly how your site is functioning. Search algorithms and SEO tactics change frequently, and your sellers probably weren’t tracking everything before they turned the business over. Plan to review it all from your keyword and semantical phrase usage to content curation and even your product tags and descriptions. In our analysis we focus on helping you prioritize what, how, and why you should change and add things on your website.
- Develop Your Marketing and Branding Plan. Branding is an essential part of your marketing strategy, and you want to focus on your entire approach to the marketplace. Share your message with existing customers and help them get excited about the changes you are implementing. Also, develop ways to encourage them to share the site with friends and associates – think special sales, referral bonuses, valuable content and information, and other offers that relate to your niche.
- Manage Your Message. Conduct a thorough review of your ways of communicating with your customers and how you develop your sales funnel. This will involve two primary areas: Email and Social Media. Review your email policy and plans, from creative to frequency to compliance. Work hard to make sure your emails are a pleasant surprise when they hit the inbox. On the social media front, you will want to evaluate your platforms and how they are being used. You may want to add or drop certain approaches, but make sure you are working the social media advantage full force. And a little strategic PR doesn’t hurt.
- Traffic-Building. Evaluate what metrics and attribution apps you are using to evaluate the effectiveness of both paid and organic traffic-building methods. This includes your existing PPC program, affiliate relationships, display ads and other techniques.
Of course, this is just the start, but these early points will serve you well as you start to build your business and put your own personality into the brand. We’ll explore these and other pieces of the process in future posts. Welcome to the world of e-commerce!