Ah acquiring a business.
It’s an exhilarating ride filled with both thrilling opportunities and lurking risks.
But here’s the thing you know those risks are manageable especially when you’re in control of the key factors that influence your success.
Master the Transition: Get That Seller on Your Side
Let’s talk transition the crucial period when the business assets you’ve acquired are officially yours.
Picture this: a smooth transition like a well-oiled machine sets you up for a quick and easy win.
But a messy half-baked transition can lead to a chaotic mess of problems with endless back-and-forth.
So what’s the secret weapon? Getting the seller on your side.
During the final stages of the deal confirm the level of support you’re getting from the seller and how it’ll be delivered.
Pro tip: On platforms like ours we require sellers to offer at least 30 days of email and phone support. But usually they’re willing to go the extra mile.
The support you need depends on the business itself.
A simple content site might need some standard operating procedures (SOPs) and a quick walkthrough.
A SaaS business on the other hand might require a developer to stick around for months to train you or your team on the software.
Here’s a crucial step: Ask the seller to take you through every nook and cranny of the business. This helps you understand how it operates what your role will be and what skills you’ll need. You might realize you need to outsource some tasks or maybe you discover ways to leverage your expertise to improve their existing processes.
Identify and Mitigate Your Potential Business Wreckers
Now let’s dive into the real meaty stuff: those dreaded “single points of failure.” These are the critical components that could bring your entire business crashing down if they’re not addressed.
Here are a few common ones we see in online businesses:
1. Key Person Risk: When Your Business Relies on One Star Employee
This happens when a single employee like a CEO or a developer who built the software becomes irreplaceable.
Without them the business crumbles.
Imagine losing your star developer for a SaaS business – you’ll be left with unusable software that you can’t even upgrade!
The solution? Find a replacement employee who can step into their shoes. Hire them in a supporting role to learn the ropes and be ready to take over if needed.
Remember: When finalizing the acquisition ask the seller to create comprehensive SOPs for all operations. That way you can train new employees seamlessly.
2. Majority Client Risk: When Your Business is Overly Dependent on One Big Customer
This is a classic problem.
A business might be reliant on a single client for a whopping 80% of its revenue.
If that client walks away you’ve just lost 80% of your income!
The fix? Expand your client base by attracting more high-ticket customers. This might mean reducing the number of smaller clients to accommodate the larger ones. This creates a more robust and resilient revenue stream.
3. Traffic Source Dependency: When Your Website Relies on One Traffic Channel
Content sites often rely on Google organic search while Amazon businesses depend on Amazon PPC or organic search.
The problem is these sources are not guaranteed.
Google might change its algorithms affecting your traffic or competition on Amazon PPC might skyrocket forcing you to pay more for the same traffic.
The answer? Diversify your traffic sources! Think about building new channels. This could be anything from content marketing to social media or even paid advertising on other platforms.
Another vital aspect of traffic diversification? Analyze how traffic flows within your website. Is 90% of your traffic coming from Google but concentrated on a few specific pages? This makes your traffic vulnerable to Google’s updates.
Pro tip: Ask the seller to walk you through their site’s analytics dashboard. This will reveal how traffic is distributed across different pages. Ideally you want traffic spread across several pages not just a few.
4. Product Reliance: When Your Business is Stuck with One or Two Hero Products
Your hero products are the superstars of your business generating most of your revenue.
But what happens if they get discontinued or their demand drops? It’s a risky proposition.
The solution? Offer a diverse range of products distributing revenue across multiple offerings. For content sites this means expanding your affiliate offers or exploring new advertising networks.
5. Supplier Dependency: When Your Ecommerce Business Is Tied to One Source
Suppliers are the backbone of ecommerce businesses.
Production delays stoppages or shortages can mean late deliveries stock shortages and even missed sales.
The way out? Have multiple suppliers for your products. This ensures a steady supply and prevents your business from going out of stock.
By addressing these risk areas you’re taking proactive steps to reduce the overall risk of your new business.
Unleash the Power of Growth Opportunities: Leverage the Seller’s Expertise and Business Data
Now let’s shift gears to those exciting growth opportunities.
While you’re learning the ropes from the seller ask them about their own growth plans.
What would they have done to grow the business if they had kept it?
Their knowledge of the following areas is gold:
- Past successful initiatives: Identify strategies that worked in the past and explore how they could be implemented again.
- Past failed initiatives: Understand what didn’t work and avoid repeating those mistakes.
- Market insights: Get a grasp of the market landscape and competition to inform your growth strategies.
They might have even started some growth initiatives that you can pick up and run with.
For example they might have a new product ready to launch.
Ask about their launch strategy and take the reins once you complete the acquisition.
Don’t underestimate your own experience and expertise.
As you learn about the business’s history you might discover ways to use your skills to achieve growth.
If you’re a Facebook Ads expert maybe the seller ran some campaigns that didn’t quite work.
You can use that data to build your own successful campaigns.
Mine the Data: Unlock Growth Potential
Besides the seller’s insights there are other data sources you can tap into for growth opportunities:
- Customer data: Customer demographics product preferences and buying habits provide valuable information. Use this data to optimize products enhance customer experience and improve conversion rates.
- Site data: Google Analytics or other tracking platforms can reveal successful keywords and ad campaigns. This guides your content creation and marketing efforts to attract a larger audience.
Remember the more data you gather the more informed your growth plans will be.
Don’t Fix What Ain’t Broke: Learn From Success
Now let’s talk about a crucial principle: “If it ain’t broke don’t fix it.”
This means respecting what’s already working for the business.
If a particular operation or campaign is contributing to success leave it be.
Here’s a word of caution: Avoid making drastic changes to things that are performing well. Changing ad networks or shutting down profitable PPC campaigns just to save money can backfire.
The golden rule? Base your decisions on data not assumptions.
Success is a Journey: Embrace the Acquisition Process
Acquiring an online business is a journey that demands careful planning meticulous attention to detail and a willingness to learn.
It’s a lot to handle for a single buyer.
That’s why we recommend working with a broker. They provide expert guidance helping you find the right business based on your budget skills experience and resources. They can also help you with negotiations and migration processes making your acquisition journey much smoother.
If you’re ready to embark on your acquisition journey sign up for a free account on our platform. We’ve helped countless individuals acquire businesses from content sites and ecommerce stores to Amazon businesses SaaS companies and more.
With our support and the knowledge you’ve gained today you’ll be well-equipped to navigate the acquisition process and build a successful future for your new business.