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Why buy an online business

Why buy an online business?

Various web entrepreneurs explain what persuaded them to buy websites or set up online businesses

The websites for sale category is among the most popular on BusinessesForSale.com.

Highly affordable, allowing flexible working hours and benefiting from relentless growth in online sales, internet business opportunities offer a compelling combination.  

Work-life balance

When Maria Osbourne bought a website with her husband, David, the mother of two was attracted by the low barriers to entry, a modest financial commitment and the chance to work from home.

"In terms of day-to-day running costs all you're paying for is your phone line and broadband, and it's up to you how much you pay for advertising and promotion," she explains. "So in terms of fixed overheads, they are very low.

"Websites are good for people with family commitments. I was looking for something that was flexible in terms of working around the children. 

"Now if the children happen to be ill, I can sit on the sofa with a blanket and watch the telly, pop in and check they're ok and have my lunch with them.

"Also for David, who gave up his business and works full-time with me, the childcare responsibilities are divided equally. He takes the children into school in the mornings and I pick them up in the afternoon, so the children see as much of their dad as they do of me and that's great!"

Andy Daniel, also wanted to work from home and when he saw an online art gallery, he couldn't help but envision the opportunity for a less stressful life. "My work at the moment is very hectic and in the future I want to slow down a bit," he explains. 

"When I saw the website on BusinessesForSale.com, I thought that would be a much better option for me," he recalls. "It would be a slower start; I could take my time over it. It was cheaper than buying an actual art gallery and would also be less work." 

Though the founder was based a long distance from Daniel's home, the business was essentially relocatable. That said, he admits to nerves when it came to transporting the fragile stock around 200 miles. "There were 128 paintings in all - and most of them were framed," he recalls.

Daniel managed to barter the original asking price down more than 50%, from $31,000 to just $14,000 - giving him an established business for less than a used Ford Mustang.

Abhai Rajguru set up Alexander Rosse, an online accountancy and bookkeeping service. "Being accountants, we're pretty good at building a financial model, so we were able to fund it ourselves," he says. "The way we're structured, the cash flow means we don't have a huge investment and that's one of the features of modern electronic businesses.

Outside expertise

"You can plug in outside expertise and pay for it as you use it, rather than having to buy huge IT infrastructures or premises and things like that."

Christopher Hill founded an online travel agent targeted at professionals aged between 27 and 38, a demographic group who use the internet heavily. "Because we were targeting young professionals, who tend to be rather web-savvy, we knew the internet was very important," explains the CEO of Hands Up Holidays. "We focused and invested a lot into getting key words right for Google searches."

The continual improvement in digital technology heralds the feasibility of new business models. Traditional models of publishing, for example, are being challenged. 

Richard Stephenson believes his self-publishing website only became viable recently. "The rapidly increasing availability of broadband, and the falling cost of hosting, enabled a way to provide documents, magazines and newspapers online, in a way that had never been done before," says the founder of Yudu Media. 

The success of dotcom entrepreneurs like Stephenson is rooted in their ability to harness the internet to revolutionise a sector and deliver better value - but also to bide their time until the technological infrastructure is capable of supporting their plans.

Gavin Wheeldon recognised that the market for translation services was archaic in the digital age. In 2003, with most households now enjoying broadband internet, he set up Applied Language Solutions and set about delivering a jolt to a staid sector. 

"The main thing is process automation," he says, explaining the overarching advantage the upstart dotcom had over more traditional competitors. "For example, you can now go on our website and get a tattoo translated into most languages for £6. 

"Prior to that, if someone wanted to go to an agency, they'd be paying at least £40 because of the sheer cost of inputting the order, the project manager finding the translators, and the management of the process."

"Now every step of that process is automated except for the human translation element. We're able to make a profit on £6, whereas the other agents are barely able to make one on £40."

Able to undercut the competition, Applied Language Solutions has unsurprisingly flourished and Wheeldon now presides over a company turning over £7.5m a year.

As well lower operating costs, selling services over the internet has afforded him and his 120 employees considerable flexibility. "Better technology also allows the staff flexibility, such as home working. I can stay at home and do exactly what I can do in the office, for example answering the phone because we are all on VOIP."

What's not to like? Not much, but business is never a breeze, no matter what the medium.

Double-edged sword

Marcus Simmons, who set up an advertising website, warns that the innate advantages of internet businesses can lead to complacency - as the hubristic entrepreneurs who failed spectacularly during the first dotcom boom discovered. 

"It's a double-edged sword: it's a low-cost start-up, but from a traditional business point of view your balance sheet and account can look weak because of the low-cost," he admits. "So the advantage can also be a disadvantage."

However alluring web opportunities are, tried-and-tested business principles still apply. You still need to do your homework on a prospective acquisition keep an eye on the cash flow when you're running it, and so on.

Plenty of websites still fail of course, but the lower financial risk means you can more easily dust yourself down and have another go. Get it right, Richard Stephenson says, and websites "can be very lucrative, and it doesn't cost as much money to set up compared to a bricks-and-mortar business."

He concludes: "The low start-up costs, having the option to work from home and the ability to reach a global customer base. There's never been a better time for people to start an internet business."

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David Pottingham

About the author

David is a guest author for BusinessesForSale.com and FranchiseSales.

@FranchiseSales_

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