The process of buying an online business can be very complicated, so to ensure a thorough due diligence is conducted prior to any purchase agreements being formalised I have compiled a list of questions that should be submitted to the vendor.
These questions will provide the purchaser with a better perspective of a business and its potential market value.
- What was the start date of the business?
- Does it have its own website?
- Does it have an eBay store or other sales channels?
- Have you been the owner since inception?
- Provide a Profit & Loss Statement since inception or the last two fiscal years.
- Provide percentage of turnover per sales channel.
- Give a comprehensive list of inclusions in the sale price.
- Advise expected stock holding value at business sale date if the business was to operate normally up to that date.
- Does the business currently have product insurance?
- Are any special licences or qualifications required to sell the products in Australia?
- Are there any special requirements to import these products into Australia?
- Do you intend to continue to trade in the industry? If so, in what capacity? If not will you sign a restraint of trade contract?
- Is your website 'in house' developed or proprietary software?
- Are there any conditions to the sale?
- Is the business listed for sale via any other media or are there any business brokers involved in any way?
- Is the business encumbered in any way?
- How many suppliers do you have?
- Do you have a customer database and if so how many customers are on it?
- Would you consider a product range expansion viable?
- Please provide all and any other information which would assist in making an informed purchase decision.
So there you have it, a comprehensive list of questions to ask any vendor. Although the above questions are targeted towards a business selling products, they can be varied and applied to almost any type of business.