Many entrepreneurs think that they will be able to launch their startup and find success within the first year. However, they are soon hit with the reality is that this almost never happens with an online business.
In the majority of cases, it takes much longer than that to achieve any measurable success. In fact, in most cases, it can take as much as four years before seeing any kind of significant revenue.
A lot of people do not want to have to wait this long to achieve success with their business. These people will either end up losing interest or funding long before they reach the one year mark. Luckily, there is a way to find success faster by doing one simple thing. By buying an already existing online business, entrepreneurs can help to jumpstart their startup success story by months or even years.
Thriving Customer Base
Finding and retaining customers in the online marketplace is the third biggest challenge that online businesses reportedly face. Therefore, when they are able to start with an already present customer base, it makes the challenge much less daunting.
Thankfully, if an online business is up for sale, that means it will have already been in full operation for at least several months. During this time, it should have gathered quite a few new and loyal customers. In addition to customers, it should also have a developed email marketing list. The entrepreneurs will take possession of both of these once they purchase the site.
Therefore they can focus a lot of their attention on things like improving products and altering the website layout. This saves them from having to spend a lot of time trying to entice new customers to visit the site.
Developed Social Media Presence
Considering the fact that 75 percent of customers use social media as part of their purchasing process, it is incredibly important for online businesses to have a strong social media presence. However, in order to do so, they need to make a lot of social media posts on all major platforms.
Developing fully fleshed-out Facebook, Instagram, Twitter, LinkedIn, and other accounts are something that takes at least several months to do but can often require years of effort. This can be easily circumvented by instead purchasing an online business that has already spent all of this time and effort creating engaging social media accounts.
Depending on how long the online business was in operation for and how large it grew to be, it could have a total follower count upwards of 1,000 people. This is something that can help put the entrepreneur a lot closer to achieving success with the online business.
Finding Successful Business Operation Tactics
When someone builds a company from the ground up, they’ll have no basis for what kind of tactics work. This is unless they have previously run an online business that is very similar to their current one. Having no frame of reference for successful business tactics will force them to do a lot of trial and error.
This can often lead to a lot of time and money being put towards something that then ends up failing. It is during this process of trying to figure out what combination of tactics to use that an online business often runs into financial problems that lead to it closing its virtual doors.
When you decide to buy an online business, a lot of the trial and error will have already been done for you. If the online business has grown to a point where you are interested in buying it, then it means that the combination of tactics that it is using must be at least mostly successful.
Therefore, it is very likely that you may only need to apply small changes to maximize the business’s performance. This will end up saving you a ton of money and effort and help you achieve success a lot faster. With all of these great benefits, it is no surprise that so many entrepreneurs choose to buy an online business. To buy some of the best online businesses out there for some of the best prices, then visit Flippa today.
There are a number of factors that go into valuing a business. These are widely known – financial trending, margins, traffic, proprietary tech – but in an industry that is barely 35 years old AGE is also big factor. In this case of Art Cove the business has been around for 50-years, first trading as a retailer in Queens before moving online in 1999. In 2015 they shot the store and now trade exclusively online, both direct and via core marketplaces.
In this Seller Interview we speak with Josh Simone from ArtCove. He takes us through the history as well as their marketplace expansion.
1. The business is 50-years-old. How has it changed in that time?
We started off in 1971 as a brick and mortar art supplies store. After some time we added craft supplies to our store. The business took off with the newly added craft supplies. As time went by, big box stores moved in so we shifted to eCommerce starting our website artcove.com in 1999. At first, instant success but then things started getting more competitive.
In 2014 we started selling on eBay. And in 2015 we started selling on Amazon. We did $200,000 in our first full year on Amazon, with little to no effort, we listed just a few products. In 2018 we expanded to Walmart, Etsy and started building a new website with Shopify giving us the ability to sell across Facebook and Google also. These projects are fairly new but show great promise. Like all great business you must change with the time and we have done this many times through 50 years of trade.
2. You’ve expanded to all marketplaces including Amazon, eBay and Etsy. How have these channels impacted the business?
It was easy at first. We started selling on eBay then Amazon, moving high volume product quickly. The problem is margin. These are a lot lower on Amazon. Our recent expansion shows real promise, we’ve expanded to Walmart, Etsy and started to build a new website reducing our dependency on Amazon. I think by expanding to several marketplaces we have set the business up for long term success giving us and any potential acquirer opportunities and genuine diversification.
3. With so much history you must have a loyal customer base. Do you have a good repeat buyer base?
We have a very loyal customer base. We provide outstanding customer service which keeps people coming back. We just recently rolled out a customer project board so we can see what our customers are doing with our supplies. This has really helped to build long term relationships and get to know our customers much better. We do business with Sea World, Sesame Place, The Los Angeles Lakers, The Howard Stern Show and many other large businesses. We do a lot of business with schools and non-profit organizations also.
4. What are people buying and has it changed over the years? Are their clear trends?
We have focused on everyday type products that anyone can use. We stay away from fads or short-term trends. One of our biggest products is Craft Mirrors. These are an everyday type item that always sell well year-round. We have also found that a lot of best sellers are not carried by the big box stores so this insulates the business somewhat. We have several product lines that no one carries. At the same time we are always adding new products to our website. The trends are very clear.
We run ads for our best performing products and respond well to customer feedback…making product decisions accordingly.
5. There’s so much history here. Why are you selling?
This is a three-generational business, so we do this for a lot more than the money at this point. It’s about keep the business going and taking care of our customers. We are looking for someone to take over our tradition. There’s so much history and even more opportunity here.
When the average person thinks about building wealth they often follow what they’re taught in school and what their peers or family are doing with finances.
The majority of the time that means go to school, get a well paying job, save money, invest in stocks, invest in mutual funds, and retire one day.
This is a very well trotted path and if you’re interested in having an average amount of “wealth,” that is the safest path ahead.
However, if you want to build substantial amounts of wealth giving you and your family financial freedom, you will need to move off of the beaten path.
You will need to get comfortable with higher levels of risk, begin to understand the importance of cash flow, and do what you can to cover your expense with income generating assets.
I have never met a truly wealthy person that reached their financial independence by not taking risks.
All that being said, taking calculated risks are a healthy middle ground for smart investors looking for alternative asset classes.
Accumulating as much data as possible to support your investment into a newer asset class is the strongest approach to measure your risk.
With web properties like e-commerce, content sites, mobile apps, domains, SaaS businesses, and many others available on the Flippa marketplace now being considered a bona fide asset class for buyers and investors available data is in abundance.
This makes calculated risks easier.
Before I allocate any capital to a new asset, I always weigh the costs and benefits for both long-term and short-term allocation. These are the first three (of many) questions I ask myself before finalizing a deal for a web property on Flippa:
- How long until I reach 50% return on my investment with this web property? How long till 100%?
- If the web property fails immediately how quickly can my portfolio make up for the loss?
- What are additional revenue streams I can add to de-risk this web property?
By answering those questions and a few others I’ve weighed the rough costs vs benefits of NOT buying a quality web property at a fair monthly multiple of revenue. Asking basic questions like those builds confidence, helps with your mindset, and significantly de-risks the investment overall.
The majority of the time while doing my due diligence, I operate in worst case scenario. Dozens of other buyers and seasoned investors I’ve met over the years in this space do the same.
To give a rough average of the returns that can come from acquiring web properties, over the last 3 years, I’ve seen more than half of the web properties in portfolio yield a 100% return on investment (ROI) within 12 months of buying them, after expenses.
That level of return on investment is only available through taking risks on a newer asset class that other investors aren’t as familiar or comfortable with.
This would be considered investing off the beaten path.
Following what everyone else is doing will give you the returns everyone else is getting.
Taking calculated risks on web properties on Flippa using large amounts of public data has proven time and time again to outperform the majority of assets I’ve ever owned.
Investors I know and respect all take risks on alternative asset classes multiple times per year to test the waters with higher returns.
Fortunately, it’s still extremely early in the landscape of buying web properties and with Flippa you have the ability to freely communicate with sellers directly.
If you are searching for a way to change the trajectory of your life and accumulate true wealth, take a risk on by acquiring a small web property on Flippa to test the waters.
Spread your allocation out across multiple niches and business types, and make sure you’re collecting as much data as possible to de-risk your investment.
Also, be sure to have fun with the process.
Author bio: Steve McGarry
Steve is host of The Sound Money Podcast and spends most of my days talking about blockchain startups, dApps, coffee, and influencer marketing.