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- Sep 13, 2013
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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.