Which Type Of Online Business To Buy?

Today, more and more people are looking for an online business to buy.

Whether that be due to the pandemic which changed the livelihoods of many or a simple desire to take more control of one’s financial situation, it’s a trend that’s only increasing.

But once the decision to buy an online business has been made, a more important question has to be considered.

What type of online business to buy?

The Different Types Of Online Business To Buy

It may surprise people to learn that there are many different types of online businesses.

Take a look at Flippa as an example of the different types of online business that can be purchased.

Each has its own pros and cons.

But if you’re going to have the best chance of making an online business a success, you need to know which one is best suited to you.

And you need to know the questions to ask before buying a business.

Let’s take a look at the most common types.

Content

What is it?

Content sites incorporate blogs, directories, review sites and forums.

Anything that has a primary purpose of conveying information.

This could be through articles, comparison of goods and services or even from answers provided by a community site.

Mainly monetised through advertising although a content site with a sizeable email list could be the springboard for other online revenue streams.

Pros

Simple to understand, fewer moving parts than a full ecommerce;
Revenue through advertising can be fully automated;
Private sponsored posts can be negotiated as additional revenue stream;
Content creation can be outsourced.

Cons

Main advertising revenue may be concentrated from one platform;
Heavily reliant on Google search in most cases;
Must continually create content for SEO purposes, as well as gain backlinks.

Ecommerce

What is it?

E-commerce is a type of online business to buy which involves the sale of products.

The products could be delivered directly by you, as with an inventory-holding operation or by someone else, as with a drop-shipping operation.

No physical store is required and a number of ecommerce operators use a standard online store, such as Shopify.

Pros

Tasks such as marketing and inventory distribution can be automated, relieving the need for many employees;
More data exists to determine whether marketing or other efforts are making a return;
No physical shop-front is required;
A business brand can be built quickly.

Cons

The same issues with selling product traditionally (ie. funding for working capital) still exist with ecommerce;
Supply-chain issues may exist depending on the source of product materials;
The ease at which an e-commerce operation can be commenced has also intensified competition.

SaaS

What is it?

SaaS refers to software created and sold under a number of models.

It could consist of an app sold D2C or other customised software, sold B2B.

Monetisation is through either sales or royalties received from licensing the software.

Pros

As the product is sold digitally, once initial costs of creation have been incurred, the majority of every sale afterwards goes straight to profit;
Your team can be located anywhere in the world;
Much higher multiples apply to the sale of SaaS businesses.

Cons

Customer service has to be exceptional for resolving any day-to-day issues;
The rate at which product updates are required can be intense;
Competition is fierce.

Services

What is it?

This can cover a range of traditionally-provided services.

Digital marketing, accounting, legal, etc.

The main provision is that these services are provided online and don’t necessarily require in-person meetings.

Pros

Can have staff work from home;
No need for an office;
Policies and procedures can be updated/automated to ensure workflow is efficient.

Cons

Scope creep may occur with productised services;
May still be requirements for in-person meetings;
Staff may feel isolated and need human interaction for develop and social purposes.

Type Of Online Business To Buy – A Summary

There’s no right or wrong answer when determining which type of online business to buy is the best one.

This will come down to your aptitude as a business owner and playing to your strengths.

But knowing the different types of online businesses and the pros and cons can go a long way to help you determine the right path for you.

Which Type Of Online Business To Buy?