Well most of the business sold on Flippa/EmpireFlippers/FEI rely on one of the following:Thanks @Pesh
Do you look for a particular sort of business, like FBA or Dropshipping or Saas? For instance if its a Dropshipping business that uses mostly paid advertising, it would probably be less valuable in my eyes as the advertising will need to be kept up to keep consistent sales. The price you pay is for the basic setup and the supplier contacts etc.
SaaS businesses would probably have less dependency on direct paid advertising like Facebook Ads/Adwords, or even if they do it won't be as high as some Dropshipping businesses. However SaaS businesses can go downhill very quickly if the service is not kept relevant to the constantly changing marketplace. Another aspect to consider would be that Dropshipping businesses would need say Adwords/SEO knowledge whereas SaaS businesses may need Affiliate marketing knowledge and perhaps also either coding skills or a programmer in your team.
What are your thoughts?
- Organic traffic (SEO, Direct)
- Paid traffic (FB/Google/Insta/Etc)
- The traffic of Amazon.com (FBA)
I am not including Apps, because I literally have 0 experience with Apps.
All of the traffic sources above (excluding direct/word of mouth) can go against you in just one day. Be it a new algorithm (SEO), new advertising policies/rules or a competitor with bigger budget willing to pay more than you do, new competitor in the Amazon marketplace and so on. Not to mention all the unethical ways to bring you down (or at least try to) that exist nowadays.
It's hard to say which is the most "risky" as it is very business depended (on a case by case basis, not type of business basis). The examples you mentioned can be mixed the other way around as well: i.e I know dropshipping businesses that relies primarily on SEO, I know SaaS buisinesses build entirely on the FB Advertising platform, affiliate marketing businesses based only on Instagram influencers and so on..
What people usually recommend is to buy a business that does not rely on a single traffic source. This is a great advice except the fact that multiple traffic business increase the price multiplier even further (and for a good reason, multiple traffic sources is the holy mantra for internet entrepreneurs).
If you have a certain set of skills (or a network of people that you can leverage) and know that you can buy a business that relies on a certain type of traffic and you add a new source of income - congrats you just made at least 20% on your initial investment back Can be much more than that depending on the amount of money that the traffic earns of course.
So yea this is it. If you are brand new into this whole thing I would advise you to buy a business that has at least $1000 profit per month. Profit, not earnings. And a business that has at least 1 year of earnings before the date you bought it. Then once you buy it, study it, do not rush on changing things, adding stuff etc. Trying to "revolutionize" your newly acquired internet business is a double edged sword especially if it is in an area that you have no experience with. Just observe what is happening in the next couple months. Talks with the team/VAs if they came with the business, talk with the previous owner as much as you can. After a while you will get the grasp on how things are running and you might have an idea or two for some improvements. Again start small, observe what happens and continue with the new data that you have.
Just a quick note - if you are after a SaaS business, you might want to take a look at FEInternational, another well respected and good broker that also sells all type of sites but SaaS is where they are shining (in my humble opinion, I hope no one gets offended or something). For dropship/e-commerce/FBA/advertising business all of the good brokers/marketplaces have plenty to offer.
Edit - DISCLAIMER: Buying an internet business is a VERY risky investment. You have to keep in mind that while you can multiply your investment in a year you can also loose most if not all of it in the same amount of time. Be reasonable