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Buy My First Ecom Business?

DCDeuce

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Hey fellow Fastlaners,

So for a few years now I've tried and failed at a few different businesses, I followed this forum for almost 3 years now trying to figure out which Fastlane business to pursue and I've not been able to make my mind up. I currently am in real estate and I'm realizing every day that it is time to move on as I do not have any control of my business no matter how much I put into it.

Recently one night when I was evaluating things, I re-read @doitman's amazing thread as well as @Greg R's equally amazing thread on buying an established business. The next morning I set out searching for a business to buy. Starting out I specifically did not want to buy an Ecom business that revolved around Amazon as that violates the Control commandment or on Shopify via the Exchange as most of these businesses seemed to always have a huge spike in sales then fizzled out, then were put up for sale.

So one-day last week I was searching on one of the online business broker websites and I stumbled across an Ecom business that is in a very specific niche, I reached out to the seller to get the specifics, in our back and forth chats I came to realize that the business satisfies four of the five CENTS commandments but also satisfies 10 of the 11 business acquisition criteria that @doitman shared in his thread.

Due to the business's niche, I asked the seller for their most recent sales from Jan 2020 until July 5th, what I was expecting to see regarding sales and revenue was exactly what I did see. The business has been affected by C0VlD-19 and there is currently about a 60% loss in sales and revenue. While this is a concern due to the niche, I have to believe the business will bounce back once cities are back to Phase 4, and completely open since this specific niche is evergreen and people will never stop utilizing this niche.

With being said I decided to break down some of the pros and cons here for everyone's input:

Pros:
  • The business has been operation for 6+ years (Longevity)
  • Business's website is also 6 years old and ranks 2nd, 4th, and 3rd for the specific keywords related to the business. This is organic not via PPC or Google Ads
  • Business holds no inventory as the item is specific to the client and takes 3+ weeks to arrive and the client is just fine with it.
  • 50%+ margins on all orders, I verified this through sales orders
  • Scalable as the current owner does not sell locally and does not sell on any other Ecom websites (ebay, etsy...etc)
  • Daily time investment is less than 3 hours a day
  • Owner willing to train me for 30 days after the sale and then support for up to 60 days after
  • Profitable still with the loss in revenue
Cons:
  • The product does not have and is not a "need", it is more of a "want"
  • No Branding - the current owner has not branded the product
  • roughly 60% loss to business due to the pandemic
I'm sure there are other cons, but at this time I cannot think of any at the moment and I'm sure this is due to me looking at this opportunity with rose-colored glasses.

The seller is not offering seller financing at this time which is a bit of a bummer, i'm not sure if this is due to the seller desiring a clean break from the business or if this is due to the seller wanting to put the cash from the sale into the new business. I don't want to buy the business outright as I don't want to have most of my available cash tied up in this business. At the same time I know I can scale to increase profit by increasing social media footprint (currently it is abysmal at best), utilizing other Ecom platforms (eBay, Etsy, Amazon) and partnering locally with vendors within the same niche sphere. My immediate thought is to get a P2P loan but I feel like that is working backwards and going into debt? I do have the capacity to purchase via my credit cards but again, I feel like this would be working backwards.

The Financials

The seller currently is currently asking 30k for the business, included in the sale is the website (most important to me due to rank) Branding (which I feel there is none), the social media accounts, the current vendors, and the contacts previously negotiated and e-Commerce platform accounts. Revenue is currently a little over 15k for this year, however, last year's revenue was just shy of 40k. All of this was verified from the store stats and performance.

Am I crazy for not jumping on this now?

I welcome any and all input from the Ecom Gods @ZCP @minivanman @Walter Hay @Greg R @Kak @MJ DeMarco @Andy Black @Vigilante @Mike Partee @biophase @Ecom man and anyone else who has been down this road.

Thanks for reading.
 
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Knuffix

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Have not been down this road but still would like to add some comments / questions.

Business holds no inventory as the item is specific to the client and takes 3+ weeks to arrive and the client is just fine with it.

Is this dropshipping? Why the 3 week delivery time?

No Branding - the current owner has not branded the product

Bad sign in my opinion. Sounds like a commodity product(?)

The seller is not offering seller financing at this time which is a bit of a bummer, i'm not sure if this is due to the seller desiring a clean break from the business or if this is due to the seller wanting to put the cash from the sale into the new business.

Make sure to ask him for his reasons for selling and why he won't offer any seller financing. Lack of seller financing could be interpreted by you as a lack of confidence in the business' future revenue / profit potential.

My immediate thought is to get a P2P loan but I feel like that is working backwards and going into debt?

If the numbers make sense to after cash flow is covered by debt service, then it's not a problem financially speaking.

The seller currently is currently asking 30k for the business, included in the sale is the website (most important to me due to rank) Branding (which I feel there is none), the social media accounts, the current vendors, and the contacts previously negotiated and e-Commerce platform accounts.

Only important assets in my opinion are bolded. As for the price: If you would be paying 30k cash at the current profitability it would be about 25% yearly return on your money. At the old revenue of 40k it would be 66%. You could try and make him part of the process by giving him a part of the 30k as a earnout, provided the business would achieve a normalization of revenue to the previous level of 40k/year.

Just my 2 cents.

€: Also, in regards to what @Odysseus M Jones said below, ask him why in 6 years he only got to 40k in revenue. Something's fishy about this.
 
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Odysseus M Jones

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Business's website is also 6 years old and ranks 2nd, 4th, and 3rd for the specific keywords related to the business. This is organic not via PPC or Google Ads
High ranking but not converting?
How many searches are there?
How is the competition doing?
Can the niche grow or is it maxed out?
Cons:
  • The product does not have and is not a "need", it is more of a "want"
  • No Branding - the current owner has not branded the product
I would say they are pros, especially the brand aspect provided there's potential to brand it.
People buy on wants not needs.
last year's revenue was just shy of 40k
That's a worry, 6 years in business...
Am I crazy for not jumping on this now?
If it sounds too good to be true then it usually is.
Look hard for reasons not to buy it, look real hard & only if you can't find any good reasons not to buy consider buying because once you get excited about something you'll look for reasons to support why you should buy it, (confirmation bias.)

That's my take, let's see what the gods say.
 

Action Mike

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No experience buying a business but have ran online ecommerce businesses.

One big thing for me would be the ability to scale it. If I read it right with last years revenue and working 5 days a week and 3 hours a day comes out to just over $25 an hour. Not bad for a side job but I would want to be able to scale to a much higher than that for my time spent. Is there potential to have more and more sales without being dependent on your personal time?

Them not owner financing could just be because they want to put it in another venture right away and don't want to wait several years to recoup the money, or it could be they lost faith in the business.
 
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DCDeuce

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Have not been down this road but still would like to add some comments / questions.



Is this dropshipping? Why the 3 week delivery time?



Bad sign in my opinion. Sounds like a commodity product(?)



Make sure to ask him for his reasons for selling and why he won't offer any seller financing. Lack of seller financing could be interpreted by you as a lack of confidence in the business' future revenue / profit potential.



If the numbers make sense to after cash flow is covered by debt service, then it's not a problem financially speaking.



Only important assets in my opinion are bolded. As for the price: If you would be paying 30k cash at the current profitability it would be about 25% yearly return on your money. At the old revenue of 40k it would be 66%. You could try and make him part of the process by giving him a part of the 30k as a earnout, provided the business would achieve a normalization of revenue to the previous level of 40k/year.

Just my 2 cents.

€: Also, in regards to what @Odysseus M Jones said below, ask him why in 6 years he only got to 40k in revenue. Something's fishy about this.

My apologies, 40k was just last year alone, not the entire life of the business.

My thoughts exactly, the most important asset of the business is the website and the current vendors.

Yes this business works on dropshipping, however, the niche can be customized which is why clients are not upset about the slow turn times.

I wouldn't necessarily call this a commodity product as there are differences in the competition, I plan on adding one or two functions to the product to be further set apart from the competition.

The only reason I asked about seller financing was that I don't want all my cash tied up in this one business, I actually think the business is ingenious but see no need to have all my eggs in one basket regardless of when I will get my initial investment back.

Thank you for your input, helps me make a more informed decision.
 

Odysseus M Jones

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€: Also, in regards to what @Odysseus M Jones said below, ask him why in 6 years he only got to 40k in revenue. Something's fishy about this
Sorry, I didn't write that clearly.
What I meant was only 40k PA despite being in business for 6 years.
 

DCDeuce

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High ranking but not converting?
How many searches are there?
How is the competition doing?
Can the niche grow or is it maxed out?


I would say they are pros, especially the brand aspect provided there's potential to brand it.
People buy on wants not needs.

That's a worry, 6 years in business...

If it sounds too good to be true then it usually is.
Look hard for reasons not to buy it, look real hard & only if you can't find any good reasons not to buy consider buying because once you get excited about something you'll look for reasons to support why you should buy it, (confirmation bias.)

That's my take, let's see what the gods say.

I don't believe the niche is maxed out, I can grow the niche by partnering with local vendors and expanding to other platforms. Looking at the screengrab sent to me the conversion is at 24%, this time last year it was at 30%. I believe I can increase this by expanding the line of products offered as well as adding in a bot or retargeting. I haven't reached out to the competition yet, however, the competition seems to be outpacing this seller due to the lack of items listed above (other sale platforms) and the competition has started using google ads but not Facebook ads or Yelp Ads. Searches as of the 5th of July was 22k, this time last year 47k.

I'm specifically looking for reasons to not buy, which is why I brought it to the forums
 
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DCDeuce

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Sorry, I didn't write that clearly.
What I meant was only 40k PA despite being in business for 6 years.

I will ask the seller about this but I do think it is a lack of utilizing paid ads, the lack of expanding social media platforms, the lack of using other Ecom platforms. The main competitor utilizes one of the other Ecom platforms and that is it.
 

Odysseus M Jones

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I will ask the seller about this but I do think it is a lack of utilizing paid ads, the lack of expanding social media platforms, the lack of using other Ecom platforms. The main competitor utilizes one of the other Ecom platforms and that is it.
Did you try this?
 

DCDeuce

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Did you try this?

I have not but will now that you've shared that with me.

Thanks for the insight and questions, I'm trying to think of reasons not to buy.
 
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Knuffix

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My apologies, 40k was just last year alone, not the entire life of the business.
Sorry, but that's what I meant. How come he couldn't scale to more than 40k per year since the inception of this business? Do you have records of the years 1-5 in terms of revenue and profit?

Yes this business works on dropshipping, however, the niche can be customized which is why clients are not upset about the slow turn times.

Dropshipping from China or from a US supplier? What would be the costs to store, ship, customize in the US or locally as not to be dependent on some potentially foreign supplier?

I wouldn't necessarily call this a commodity product as there are differences in the competition, I plan on adding one or two functions to the product to be further set apart from the competition.

Any patents or copyrights on the product? What would be the barriers for competitors that wanted to rip / copy this product?

The only reason I asked about seller financing was that I don't want all my cash tied up in this one business, I actually think the business is ingenious but see no need to have all my eggs in one basket regardless of when I will get my initial investment back.

Again, asking for seller finance is a must. In this case, knowing the reasons why he won't accept any seller financing or earn-out could be a good way to know for sure that he's not selling you a lemon.
 

DCDeuce

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Sorry, but that's what I meant. How come he couldn't scale to more than 40k per year since the inception of this business? Do you have records of the years 1-5 in terms of revenue and profit?



Dropshipping from China or from a US supplier? What would be the costs to store, ship, customize in the US or locally as not to be dependent on some potentially foreign supplier?



Any patents or copyrights on the product? What would be the barriers for competitors that wanted to rip / copy this product?



Again, asking for seller finance is a must. In this case, knowing the reasons why he won't accept any seller financing or earn-out could be a good way to know for sure that he's not selling you a lemon.

I feel like the sales being at 40k last year and 15k this year is due to the seller splitting time between the second business and this one. I'll ask for the sales in 2018 and see how sales faired, which will let me know what the sales and revenue were when the current owner was putting their full attention into the business.

Currently the seller dropships from china, however, my first thought was to bring in a US supplier make turn times quicker and so I'm not dependant on an overseas entity.

I don't believe this is a product that could be patented but by adding either one or both of the fuctions I have in mind, I will see about patenting and branding the product which I believe raises the barrier for competition. Currently, there is none.

My thoughts exactly Re: the seller financing. At first, I wanted to save cash but thinking more about if the businesses had no issues than seller financing shouldn't be an issue assuming the seller does not need the cash to put into something else.
 

Odysseus M Jones

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I don't believe this is a product that could be patented but by adding either one or both of the fuctions I have in mind, I will see about patenting and branding the product which I believe raises the barrier for competition. Currently, there is none
Patents are useless unless you have the resources to defend them. Lots of time & money.
Currently the seller dropships from china,
You could also think about ordering quantities shipped to your facility &/or getting the modifications done by the manufacturer in China.
Or maybe better, order the product from China & get the mods done in the US.
That's like KFC, they use 3 suppliers for their secret recipe, no one knows the whole formula.
If you still want to go the dropship route you won't get a manufacturer to make modifications purely for you exclusively, they'll sell it to others too.

Unless you get your logo embedded.

Lots to think about.
 
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I'm specifically looking for reasons to not buy, which is why I brought it to the forums


1) Drop ship product-- if you can drop ship it, so can any competitor that happens to come along.

2) 40k revenue is really peanuts, even at 50% margin. My personal rule is not to get into something on the assumption that you will make drastic improvements. What happens if those improvements don't play out? If they do, then great! But don't buy something that you wouldn't otherwise given the current numbers. In other words, buy something you'd be happy with even if you can't make drastic improvements.

3) No seller financing-- he wants you to take all the risk. There could be a number of things he knows that you don't. Maybe the supplier is competing or planning to compete with him. Maybe other suppliers have been flooding the market. Here a hint: type in the product on here: Ad Library

It will give you an idea of how many people are advertising the product on facebook.

4) Single source of business-- in this case, all traffic comes from google search.

5) The ranking is pretty decent already. The site is near the top for many keywords, and yet, again, it's only 40k revenue at best. The 24% conversion is suspiciously high, most sites would be ecstatic to have 2% conversion.


As to your debt question-- I believe it is worth taking on debt for the right opportunity if the numbers warrant it. The worst thing would be to take out a loan for a bad opportunity, giving you the worst of all worlds.

Overall, I think buying a business is a smart approach. It's all in choosing and vetting the right opportunity. It takes the same amount of effort to evaluate an okay opportunity as it does a great one. Go for the great one. This is not it, IMO.

disclaimer: I am not an ecomm god.
 

DCDeuce

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***Just an update***

The seller told me they did just 55,6xx in 2018, verified via a screengrab for the store.

Regarding the decision to not allow seller financing - the seller wants to buy a vehicle...which makes me think...why not wait a year, take the profit from the store after taxes and buy said vehicle...
 

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I think you're looking at buying a business with the right perspective. You're looking at the model and considering the numerous ways you can skew value. What would CEO of X company do? You're asking a good question. A better question is, should you even be the CEO of this company?

Take a step back and look at the opportunity from a birds eye view. What do you have to gain? Whats the upside here? 2-3yrs from now where will you be? How will this purchase bring you closer to your longer term goals?

Don't buy a business just on the premise that you understand the model and believe you could improve it. Does it even align with your interests and values? Can you bring a unique value proposition to the table to really differentiate? Even if you 2x' your sales, will 80k revenue be worth anything to you?

Who would you really be helping, and is that how you can best help people?
 
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It sounds like you could start this business tomorrow and be at the same point within a few months.

Are you wanting to spend $30k for the SEO rankings?

You said it has no brand. What assets are you purchasing?

Do they have a special manufacturer that you wouldn't otherwise be able to manufacture your own better version of the product?
 

DCDeuce

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It sounds like you could start this business tomorrow and be at the same point within a few months.

Are you wanting to spend $30k for the SEO rankings?

You said it has no brand. What assets are you purchasing?

Do they have a special manufacturer that you wouldn't otherwise be able to manufacture your own better version of the product?

I probably could start this business tomorrow however, I don't think I could get the website or business on the first page of Google within a few months without spending some serious money. If I'm wrong please tell me but I checked the domain authority and backlinks and for that specific website the DA was 38 with 8k backlinks. The only website that ranks ahead of this specific website has 4m backlinks and a 91 DA score.

I absolutely do not want to spend 30k for SEO ranking, however, when looking at the business there are only two real assets and the website is one of them. If I could rank first page for under 7k I would gladly but the seller's website has been around for 6+ years. That is worth something.

In my analysis, this specific seller has one of the better if not best products, while there is feasibly nothing proprietary about the physical product the quality is likely why the seller has had longevity.

Thanks for chiming in and if you think it is possible to start a similar website and rank at the top of the first page is doable I would like to hear your thoughts on that.
 

DCDeuce

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I think you're looking at buying a business with the right perspective. You're looking at the model and considering the numerous ways you can skew value. What would CEO of X company do? You're asking a good question. A better question is, should you even be the CEO of this company?

Take a step back and look at the opportunity from a birds eye view. What do you have to gain? Whats the upside here? 2-3yrs from now where will you be? How will this purchase bring you closer to your longer term goals?

Don't buy a business just on the premise that you understand the model and believe you could improve it. Does it even align with your interests and values? Can you bring a unique value proposition to the table to really differentiate? Even if you 2x' your sales, will 80k revenue be worth anything to you?

Who would you really be helping, and is that how you can best help people?

That is the debate I'm having with myself, do I want to become the CEO of this company? could I be buying a lemon?

While I believe you are asking rhetorical questions I believe the upside is the business seemingly runs itself, aside from answering emails and making sure products are correct there is not much else to do at this time. If I move forward with this purchase then I'll have to monitor the numerous social media accounts, add in a blog feature, visit/call and email vendors to set up partnerships at first which will pay dividends later on. If I can successfully scale the business 2X then I would have the option to sell for "X" amount more and move on to something else.

80k in revenue would be worth it to me as it would cover my expenses an help me buy another business.

That is one of the issues I'm having "Who does this help" No one now, but I do believe this will help me buy another business that I can go on to sell to help me buy another business that I will eventually sell. Once those events happen I plan on mentoring kids in my immediate area and helping them understand that they do not need to play basketball or throw a football to have millions and retire before 40.
 
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AceVentures

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I'm no expert in dropshipping, but I'd wager nothing is as automatic as you might perceive it, especially if you're taking about ~1-2yr payout. Lot of what ifs on so many angles. From rampant competition, skyrocketing advertising costs, more conglomeration of this type of business (which with realized synergies can make them more cost competitive), supplier changes, etc etc.

I'm out of my element though - if you believe the business is sustainable and you can forecast your cashflow with good certainty, especially with little to no time commitment - that's what everybody would want. If thats really the case then, why isn't everybody jumping to buy it?

You can check with @Mike Partee who's built up good experience in the online business marketplace for general feedback. I think he might even offer some form of advanced DD service at a fee.
 

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I feel like the sales being at 40k last year and 15k this year is due to the seller splitting time between the second business and this one. I'll ask for the sales in 2018 and see how sales faired, which will let me know what the sales and revenue were when the current owner was putting their full attention into the business.

Currently the seller dropships from china, however, my first thought was to bring in a US supplier make turn times quicker and so I'm not dependant on an overseas entity.

I don't believe this is a product that could be patented but by adding either one or both of the fuctions I have in mind, I will see about patenting and branding the product which I believe raises the barrier for competition. Currently, there is none.

My thoughts exactly Re: the seller financing. At first, I wanted to save cash but thinking more about if the businesses had no issues than seller financing shouldn't be an issue assuming the seller does not need the cash to put into something else.

I would never seller finance my business for sale. When I sell I want to be done with the business. I don’t want to worry about if you will pay me or not. What if you don’t run it correctly and blame the business and stop paying? I’d rather get a lower sales price than finance a higher price.

How much would you expect the seller to finance as a percentage?
 

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I would never seller finance my business for sale. When I sell I want to be done with the business. I don’t want to worry about if you will pay me or not. What if you don’t run it correctly and blame the business and stop paying? I’d rather get a lower sales price than finance a higher price.

How much would you expect the seller to finance as a percentage?

I didn't have a percentage in mind, I would have been open to any percentage down truth be told. I was hoping to get perspective from the opposite side (a seller not want to hold financing) and I never thought about it that way. I did put myself in the sellers shoes, maybe I need the cash to invest in a new venture, maybe I need it for "X", that is the reason why I thought about a P2P loan.

If it is not too much to ask @biophase do you think I am being unreasonable asking for seller financing?

I would greatly appreciate your feedback on this.
 
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biophase

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I didn't have a percentage in mind, I would have been open to any percentage down truth be told. I was hoping to get perspective from the opposite side (a seller not want to hold financing) and I never thought about it that way. I did put myself in the sellers shoes, maybe I need the cash to invest in a new venture, maybe I need it for "X", that is the reason why I thought about a P2P loan.

If it is not too much to ask @biophase do you think I am being unreasonable asking for seller financing?

I would greatly appreciate your feedback on this.

If I'm selling something for $30k, I don't want to dick around with the buyer owing me $5k-$10k over the course of a few years.

If you can't come up with $30k, you shouldn't be buying my business. This is just my opinion towards seller financing.

I'm not going to chase someone down for $5k-$10k. What's the collateral going to be to ensure that I get my money? Maybe I keep the domain as collateral? But you can do some black hat SEO shit and ruin the URL so it's not worth anything.

I don't know you. I don't know your business skills. So why am I giving you a loan with no collateral. To me, it's just the same as giving the loan to a total stranger.

To me, it has nothing to do with whether I am confident in the business that I'm selling. When I sell something, I want to be 100% done with it. I don't want to look back.
 

Mill0006

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If I'm selling something for $30k, I don't want to dick around with the buyer owing me $5k-$10k over the course of a few years.

If you can't come up with $30k, you shouldn't be buying my business. This is just my opinion towards seller financing.

I'm not going to chase someone down for $5k-$10k. What's the collateral going to be to ensure that I get my money? Maybe I keep the domain as collateral? But you can do some black hat SEO shit and ruin the URL so it's not worth anything.

I don't know you. I don't know your business skills. So why am I giving you a loan with no collateral. To me, it's just the same as giving the loan to a total stranger.

To me, it has nothing to do with whether I am confident in the business that I'm selling. When I sell something, I want to be 100% done with it. I don't want to look back.
I agree with this comment. Under a certain amount, there's no seller financing in my book. Possibly you can negotiate a lesser sales price since he is on a steep decline. We can give you all the advice/ things to consider but what does your gut say and what do your skills say? Some people have skills that others don't. People say it's easy to just hire someone to do the things you can't, but if you don't know a few things, you won't know how to determine if that person is a good hire or not. I've hired quite a few developers with high reviews that didn't deliver and had to fire just as an example.
 

Mill0006

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If I'm selling something for $30k, I don't want to dick around with the buyer owing me $5k-$10k over the course of a few years.

If you can't come up with $30k, you shouldn't be buying my business. This is just my opinion towards seller financing.

I'm not going to chase someone down for $5k-$10k. What's the collateral going to be to ensure that I get my money? Maybe I keep the domain as collateral? But you can do some black hat SEO shit and ruin the URL so it's not worth anything.

I don't know you. I don't know your business skills. So why am I giving you a loan with no collateral. To me, it's just the same as giving the loan to a total stranger.

To me, it has nothing to do with whether I am confident in the business that I'm selling. When I sell something, I want to be 100% done with it. I don't want to look back.
There are (crowd)funding platforms that you can get loans from or a balance transfer on a credit card instead of trying to do seller financing.
 
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wouldntitbenice

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There are a lot of good posts in this thread, and I'm a little late to the game, but I have a few questions and thoughts.

Is there a broker in the middle of you and the seller? It sounds like you found this business on a marketplace (e.g. Flippa). I'm leery of marketplaces because fraud, misrepresentation, or ignorance is rampant.

The professional broker consensus is that seller financing on a deal this size is unlikely. You can sweeten the idea with a higher interest rate on the seller financing, offer above asking price in exchange for seller financing, or offer a longer term and higher percentage on an earn-out. You could agree to his terms of all cash and all at closing but ask for a 6 or 3 month hold back, where a percentage is held in escrow to guarantee the seller fulfills his training and/or that the business financials and traffic metrics are legit.

The owner's motivation for selling is a really crucial fact to nail down, and I think buyer's don't give it enough attention. I get why a person doesn't want to wait for a stranger to pay them back, but I also don't understand why he can't take anything less than $30,000 to buy a car. Can he not financing $5k - $7k of the car for a year? His reason feels fabricated.

The seller told me they did just 55,6xx in 2018, verified via a screengrab for the store.

Never trust a screenshot. They can and are photoshopped. Walk if he isn't willing to do a screen share. I would also ask to see the business's income for its entire 6 year history. Why settle for 1 or 2 years when there's 6? Simply don't accept any number under 3.

I don't have much to add about the business itself, but it reads like you're fixated on the organic search results, and "2nd, 4th, and 3rd for the specific keywords related to the business" doesn't mean a lot if they only convert into $40,000. I would take that to mean the niche isn't that lucrative or a lot of people aren't looking for it and you'll need to spend a lot on ads to increase revenue.

Please let us know what you end up deciding.
 

DCDeuce

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There are a lot of good posts in this thread, and I'm a little late to the game, but I have a few questions and thoughts.

Is there a broker in the middle of you and the seller? It sounds like you found this business on a marketplace (e.g. Flippa). I'm leery of marketplaces because fraud, misrepresentation, or ignorance is rampant.

The professional broker consensus is that seller financing on a deal this size is unlikely. You can sweeten the idea with a higher interest rate on the seller financing, offer above asking price in exchange for seller financing, or offer a longer term and higher percentage on an earn-out. You could agree to his terms of all cash and all at closing but ask for a 6 or 3 month hold back, where a percentage is held in escrow to guarantee the seller fulfills his training and/or that the business financials and traffic metrics are legit.

The owner's motivation for selling is a really crucial fact to nail down, and I think buyer's don't give it enough attention. I get why a person doesn't want to wait for a stranger to pay them back, but I also don't understand why he can't take anything less than $30,000 to buy a car. Can he not financing $5k - $7k of the car for a year? His reason feels fabricated.



Never trust a screenshot. They can and are photoshopped. Walk if he isn't willing to do a screen share. I would also ask to see the business's income for its entire 6 year history. Why settle for 1 or 2 years when there's 6? Simply don't accept any number under 3.

I don't have much to add about the business itself, but it reads like you're fixated on the organic search results, and "2nd, 4th, and 3rd for the specific keywords related to the business" doesn't mean a lot if they only convert into $40,000. I would take that to mean the niche isn't that lucrative or a lot of people aren't looking for it and you'll need to spend a lot on ads to increase revenue.

Please let us know what you end up deciding.

Thanks for asking, I ended up not buying the business, when I dug deeper the seller changed her reasoning for selling, the profit margins were not accurate with the screenshot and her supplier was shutting down operations. Suffice to say, I dodged that bullet like Neo in the Matrix.
 

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