Happy Tuesday folks, for those not living in certain Canadian provinces, we actually had Monday off as a holiday – hence no update.
But we’re back in action.
Interesting topic on my mind because yesterday episode 115 of the Solopreneur Grind podcast went live. And in the episode, I interviewed an expert on buying and selling online businesses.
I happen to find this extremely interesting and promising, because:
- as a solopreneur, I can certainly appreciate buying an existing business with forward momentum
- there are more online businesses now than ever, and not all get the love they deserve (ie. someone starts a business but for a variety of reasons, doesn’t have time to really grow it to the full potential)
- there are tons of websites and platforms making it easier to find businesses as a solopreneur
And much more.
Anyway, in episode 115 I spoke to someone who has been working in the world of buying and selling online businesses for years, and we talked about how he got into it, tips and tricks, advice for beginners and more.
Especially for folks who haven’t started a business before but have been thinking of it, this is a great entry point – and Yury gives advice on what to do if you’re new to buying/selling businesses too.
My key takeaway from the episode?
Buying existing businesses is an incredible opportunity for solopreneurs, but make sure to do the proper due diligence. Let’s go over the general steps to the process so you can see it in action:
Step 1: Education
For whatever reason, a buyer and seller start a conversation and the potential buyer needs to learn as much about the seller’s business as possible.
Depending on the size and type of business, this could be a few things or many, and most importantly, financials. Without enough information, the buyer won’t be able to make an educated decision.
Side note: this is where you want to do a lot of due diligence. Even if it requires signing an NDA, learn as much about the business as you can before deciding.
Not only does the right information help make the underlying decision – should I buy this or not? It also helps with the next step:
Step 2: Negotiation
Let’s assume the buyer gets enough information and is convinced they want to try and buy the business.
The next step is for the buyer and seller to negotiate a price and/or terms for the transaction. Again, depending on the type and size of business, this could be a really simple or complex set of terms.
And again, this is why getting enough info as a buyer is so important. If you’re going to try and evaluate a business, you need to know enough details to do it accurately.
This can also be a quick or long process, depending on the personalities of the buyer/seller. Are they looking for a quick and smooth transaction? Are they greedy? Lawyering up? Hesitant?
There are hundreds of factors that can make a deal go slow or fast. What I recommend is having at least 2-3 calls with the buyer or seller to get an understanding for what type of person they are – yes the business and details are important, but it’s almost equally important to learn whether or not this will be a good person to go through a transaction and transition with.
Which leads to the last step:
Step 3: Transition
Once (if) an agreement is made after the negotiations, you then need to complete the transaction by signing the right paperwork (please don’t skip this step) and transitioning ownership over.
Again, this can be a simple process or a very lengthy, timely process, depending on the type of business, size of the deal and the terms (is it a simple hand-over, is there a transition period that includes training, etc.).
And of course, this is a very simplified version.
Each one of those steps can be further broken down into more steps, which can take months and months (or days…).
But generally speaking, this has been my experience for smaller deals.
If you’ve done a sale or purchase yourself, do you agree? If not, hopefully it provides a little insight.
For even more advice on the topic, make sure to watch or listen to episode 115 of the SG Podcast here.
Have a great weekend and keep grinding.