Who says you can't thrive in a recession? Not every business has to suffer from a downturn in the economy. Website Properties.com is a prime example of this. We are coming off our most fruitful month in the history of our company. We closed 6 website business for sale transactions in January which included a total of 26 websites!
Despite the gloomy news we are inundated with nightly, there are a lot of people who want to buy a website business and are searching actively. The main theme seems to be the perception that the markets, real estate and brick and mortar businesses are still too risky, whereas internet business opportunities with proven cash flow are a better bet in these times of uncertainty.
The quality of internet businesses for sale also seems to be improving as well. More aged sites with 4-8 years of history, great fundamentals, sales resilience, and stable and growing trends. The most popular sites we are selling currently tend to be ecommerce websites - primarily with drop ship models.
Looking forward, we anticpate a similarly great February, with lots of activity and new listings from new clients wanting to sell a website business. We are preparing to list these new quality online opportunities which should garner plenty of interest from buyers.
Keep in mind that some of the greatest opportunities exist in recessions and some of the biggest fortunes have been amassed during the worst economic downturns in history. Choose the thrive rather than survive in these times and you shall.
David Fairley
President, Websiteproperties.com
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I spent the morning with my children watching the historic inauguration of Barack Hussein Obama. As a Canadian living in the US, having two American born children and 3 weeks away from becoming naturalized, I am proud this day that I am going to become a US citizen myself in a few weeks. It really is exciting to see a leader that has inspired a nation divided and a world looking for true leadership and a future of hope.
As entrepreneurs we know what it means to take responsibility, to take action and be eternally optimistic. The innate ability of entrepreneurs to hold a vision through to its fruition is the back bone of a great country and the core of the truth that all men and women have the opportunity to realize any dream they may embrace.
Let us take this new found energy and optimism of the moment and make a difference ourselves in our world through our own efforts to make ourselves, our families, our communities and our businesses thrive anew. The opportunities in this country and around the world are wide open - especially via the internet - which allows us to connect globally. There has never been a better time in history to embrace your dream and take action than now. Let this inspiration of historical importance motivate you in all your endeavors - whether it is building your empire online and acquiring more websites for sale, starting out with your first of many internet businesses, or selling your website for sale and focusing on other dreams - take action and make your world and the world in general a richer, healthier, more joyful and free place.
To a great year and a great new beginning. We look forward to working with you in making your vision unfold and your dreams come to fruition.
President, www.websiteproperties.com
The year that is passing may not have many fond memories for a lot of people, but for those who have invested in an online business for sale or have sold one, it wasn't such a rough ride! In fact, now that the shock and awe has passed there is an air of optimism among internet investors and website owners. 2009 is setting up to be a great year for internet entrepreneurs. Sales offline dove by several points while online sales remained positive or flat for the most part. With more layoffs and uncertainty in the workforce more people are turning to the internet for opportunities to supplement their income or take matters into their own hands.
Overall we have seen a lot of activity in the last 6 weeks of this year and expect a surge in the new year as people follow their new years resolutions to take action. There are plenty of excellent website opportunities available so saavy buyers can cherry pick the best internet businesses. There are still a lot of buyers sitting on cash reserves too that are willing to make all cash offers but at more aggressive multiples. However, 2009 may be the year of a higher percentage of owner financing deals and as a larger percentage of the selling price because interest rates are not providing much incentive for sellers to stash their cash in a bank or CD. Other deals will likely get structured with earn outs and upside potentials built in so the risks and the rewards are spread evenly between buyers and sellers.
In the end, the best deals are always fair and balanced where all sides are happy and feel comfortable. We at www.Websiteproperties.com will continue to strive towards fair and balanced deals for our clients while respecting our qualified buyers who subscribe to our opportunity alerts. In addition, we will strive towards representing and listing only the best, most fundamentally solid web-based businesses on the market, so buyers know they can rely on us to present exceptional and exciting online business opportunities.
From all of us at Website Properties, have a Happy and Prosperous New Year.
President
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Recently, we have had some issues come up with non compete agreements for a few deals we are working on. I felt was a timely opportunity to cover this aspect of a website business sale for both buyers and sellers.
Every internet business for sale will incorporate a non compete agreement or clause at the very least. This non compete element of the business is there to protect the prospect who wants to buy a website business from an unethical seller who sells their existing business and turns around and starts another similar or identical business that competes with their old site! Of course this could devastate the new owners hopes of maintaining or growing their newly acquired business opportunity, as the seller would have complete insight on the marketplace, vendors, customers, marketing and advertising channels, etc. The non compete is designed to effectively legally eliminate this scenario from unfolding.
The usual length of time is 3 years, however some business opportunities necessitate longer terms - 5-7+ years and some buyers demand more protection. If their are proprietary products, software, business practices that need exclusivity to stay competitive, then a longer term may be in order.
On the side of the seller, the term should not be as big an issue - assuming they are done with the niche and they typically have infinite other ideas and niches they would like to pursue! The seller's case usually involves not being limited or restricted to explore and develop other businesses providing they are in unrelated niches or businesses. This is usually accomplished by specifying exactly what they can not pursue - based on exactly what they are selling currently. An example case is identifying espresso makers and accessories as the specific products off the table - but perhaps not coffee beans, for instance. Making it crystal clear in the non compete agreement will avoid any future problems of overlap or competition, intentionally or otherwise.
In the case of another client, we discovered after going into due diligence when an LOI (letter of intent) or written offer was presented with the traditional 3 year non compete clause, the seller would not accept it? We discovered subsequently, that the seller had multiple sites in the same space selling a similar product! Whether this was naive exclusion or intentional misrepresentation is debatable, but what is important is securing a deal with the protection of a clear and concise non compete that is reasonable and fair to both parties. Obviously, this was a deal killer and likely saved the buyer from an unsavory experience.
In the end, most sellers sincerely want their buyers to succeed beyond them and are very accommodating with this aspect of the purchase agreement. If both parties place themselves in the other's position, a fair and balanced non-compete, purchase agreement and completed business for sale transaction are the final result.
Sometimes during a negotiation between a buyer and seller, there are definitive signs that start rearing up that lead to what is known as "deal fatigue". This can happen as early as the LOI (letter of intent) stage - which is where an initial written offer is submitted and is negotiated, accepted or rejected. It can also happen well into the due diligence phase.
In the case of the seller, it may start becoming clear that, although they may have been agreeable to a deal initially, the buyer's behavior and manner during the due diligence period may cause concerns about the future dealings with the buyer after closing. These can be anxiety about the buyer competence to manage the business (the seller's "baby") and the amount of support and maintenance that will be needed to transition the business. It can also be an attitude of nickel and diming and trying to chisel away at the agreed upon price and terms unreasonably. It also can be awareness that the buyer has unrealistic expectations or limitations they want to incorporate in the final purchase agreement that creates unnecessary risk and responsibilities on the seller that are beyond their control - such as guaranteeing specific SEO ranking, traffic and sales. The business history and fundamentals should be reason and motivation enough to make a purchase decision - which inevitably contains some risk as there are certainly no guarantees in business. Buyers need to assess the risk reward factors of a business for sale while concurrently evaluating their own skill set they bring to the new venture to determine the probability of succeeding or meeting their goals and aspirations.
Many times, these early warning signs should be weighed and a decision to walk from a deal and trust that a more harmonious deal will follow. This is much easier when the seller is not under pressure to sell or in a rush to sell. They can afford to be patient and wait for the right buyer and deal. The right deal usually means it is a smooth and fluid process where both parties are respectful and even.
On the buyer side, when a deal is agreed upon initially and they enter due diligence, red flags can start appearing in the form of incomplete data, inability to corroborate data or financial numbers, unorganized or incomplete presentation of materials to verify the business history, and erratic or highly emotional responses from the seller. If a seller is too pushy with closing in an unrealistic time frame - like 1 or 2 weeks instead of allowing a more normal due diligence and closing period of 3-4 weeks, this may be an indication of future problems. It is important that a buyer is kept current on financials of the business and that they know the seller is focused on the business health during the process. Any signs of impatience, or excuses for abnormal discrepancies in the numbers or current sales may be a sign the business is being dumped. If too many red flags show up, a buyer should really consider moving on to find an internet business for sale where these are not present.
Business transactions are primarily about dealing with people and relationships. Buyers and sellers typically will share at least 60 -90 days in a support and training period and so building a good relationship from the start - during the LOI and due diligence phase - are good indications of how the transition of the business phase will go. Both website buyers and sellers should be choosey when consummating a deal. The easiest and smoothest internet business for sale transactions are usually the most successful for both parties. If it is not win win across the board and clean and clear it is probably a good idea to move on and wait patiently for the ideal.
The opinions expressed herein are meant to provide information based on the personal experience of each broker posting to this blog.