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5 Reasons You Should Consider Buying An Online Business in 2021

Jun 16, 2021

Last year was a crazy one for all of us. The world dealt with a global pandemic and as a result, there was an unprecedented level of…well, almost everything. The stock market saw record highs in volume trading, real estate exploded, unemployment skyrocketed, and a lot of us found ourselves at home making bread for the very first time. However, in the small but exponentially growing community of online business buyers, sellers, and service providers, there was explosive growth that caught many of us by surprise.

As people spent less time at retail stores and shopping malls and more time on the internet, technology giants such as Amazon and Zoom saw incredible growth, and joining them on the journey upward were online businesses such as eCommerce, SaaS, and affiliate websites. Now, as most of the world returns back to the “new normal”, the online business world is showing no signs of slowing down, and here are a few reasons you should consider getting involved:

#1 Having Multiple Streams of Income is More Important than Ever

If 2020 taught us anything about the predictability of employment, it’s that there is none. Over twenty million people in the United States became unfortunate witnesses to that, while others saw pay cuts and longer hours. Now, more than ever, it’s incredibly important to have a stream of income outside of your day job. Sure, you may be invested in the stock market and maybe own a bit of crypto, but it’s vital to have a reliable and consistent stream of income that helps supplement your day job. Plus, it doesn’t need to be equivalent or even close to what your full-time income provides. However, as long as it’s there, it’ll continue to contribute to your savings and you can grow it over time — And in case you were to lose your job, you’d have something to hold you over until you get back on your feet.

Now, one of the most recommended ways to have a second stream of income is to start a side business. However, that takes time and well, the success rate isn’t very high. You could also buy a local business but that’ll likely require you to be very hands-on (again, time) and a good business won’t run you cheap. All of that takes us to our second reason to buy an online business…

#2 You Can Buy an Online Business that Suits Your Time and Budget Constraints

At Rapid Diligence, we work with clients from all walks of life, so we often find ourselves simultaneously working with a client purchasing a $15K website to supplement their income, alongside a company looking to make a $50M acquisition, and another individual looking to replace their day job with a $1.5M acquisition. Now, we’re not just trying to show off our diverse clientele (I mean, it is pretty cool), but rather demonstrating that there’s a level of flexibility — both in terms of time and budget — that comes with owning an online business that just doesn’t exist with traditional businesses.

Not looking to spend more than $50K on your first online business? No problem, there are plenty of great eCommerce websites in that price range. Only have five hours per week to spend on your online business? That’s what well-automated SaaS businesses with processes and teams in place are for! Not looking to spend more than $50K and only have five hours per week? Easy, there are plenty of affiliate businesses in that price range that only take an hour per week to operate. What else ya got?

#3 Location, Location, Location

A phrase usually reserved for real estate but it works here too…well, kind of. Covid proved to the world that so many jobs do not need to be done out of an office, to the extent that many companies are never going back to one, and the same concept can be applied to running a business. One of the greatest benefits of running an online business is that you can do it from anywhere in the world, as long as you have an internet connection.

After all, if you were purchasing a retail business, it would require you to be physically present at the business, even for just a few hours per week. Depending on when you needed to be there, it may infringe on your current work or life schedule. With an online business, that’s not necessary. You run the business from where you want, when you want, and it doesn’t clash with your current life or work obligations.

#4 Online Businesses Have Incredible Short and Long Term Growth

A phrase that’s often tossed around when talking about life post-Covid is “the new normal”, and that’s for good reason. While we may go back to the way many things were before Covid, a lot has also permanently changed. One example is that there are many more self-proclaimed bakers now. Another is that people’s habits and choices have significantly shifted toward using the internet for everything and anything, which many believe was inevitable but we fast-forwarded toward it. And there’s room for you to capitalize on this opportunity.

Online businesses have shown incredible growth over the past decade and there are no signs of slowing down. Before people turn to an online business or a website to make a purchase, they turn to another to get a recommendation, and then another to assess the validity of the recommending site, and so forth. It’s ingrained into everything we do.

#5 Online Businesses Tend to Be Far More Liquid than Retail Businesses

With online businesses, there are tons of mass marketplaces like Flippa and MicroAcquire, as well as dedicated brokerages, where you can sell your online business relatively quickly if and when you choose to do so (often for full cash offers, depending on the business). Now, to be fair, these brokerages tend to also exist for retail businesses, but they’re far fewer and the assets tend to be a lot less liquid. Why? Well, it’s simple:

You own a retail store that sells clothing in the heart of Houston that you’re looking to sell. Who are your prospective buyers? Likely someone who is interested in operating a retail store, has the capital to make the purchase, and is within a 15-20 mile radius of the store. How many people fit those criteria? Realistically, not very many. On the flip side, you own an eCommerce store that also sells clothing and you’re assessing your prospective buyers. Well, your prospective buyer is still someone who is interested in operating an online store and has capital to make the purchase, but you’re no longer confined within a 20-mile radius of a physical location. In fact, now your prospective buyer can be anywhere in the world, which significantly opens up your buyer pool and provides far greater liquidity.

Look, we’re not saying buying an online business is perfect for everyone or even that it’s an easy process. In fact, it’s tough knowing where to start, what to look for, and knowing what type of business best suits your needs. However, as with most things, you simply have to get started and before you know it, you’ll be building a portfolio of online businesses! Plus, there’s an incredible community of people that are willing to help first-time buyers, including us, so go out and there and get the business of your dreams!

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About Author

Rapid Diligence

Rapid Diligence provides comprehensive and data-driven due diligence services for SMBs at every price range. Whether you’re ready to close or considering buying an online business, we’re here to help!

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