This is an important question because a website purchase might look good by the numbers, it might be a good deal, it might be really intriguing intellectually, it might be a fantastic product, but it may not be a fit for your personal situation.
Making sure the website ticks all your boxes, including your personal ones, is super important in terms of the longevity, the performance potential and the gratification that you’re going to get from making that online business purchase.
Your first consideration is financial
You need to look at an honest assessment of what the risk impact is going to be to you financially. Do you have enough money to set aside into this business? Or do you have access to the money to do it? What does making an investment with that money do to your situation? What does it do to your life savings? Be honest with yourself, if you don’t have excess money, you don’t have discretionary income, or you don’t have discretionary savings then it may not be the right thing for you to do that.
Take a long hard look at what your financial situation is and the size of the business that you’re considering investing in and where the source of those funds is coming from – you may not want to be beholden to a bank or to investors. It could be that having investors or loans may be financially viable for you, but you need to be honest when considering the financial ramifications before investing.
Your second consideration is work load
The second thing that’s probably even more important than financials is having a clear view of the work that will be required in this new business. In any new business endeavor, I don’t care what it is, there’s going to be a set of tasks that will be expected or required of you as a new owner. These are things that need to happen on an ongoing basis to keep the business ticking over, these could be design things, administrative things, marketing things, customer service things, technical things; some of them may be outsourced, maybe delegable, maybe they are responsibility of the existing team but there’s still going to be something leftover for you to do as the new owner.
You need to take an assessment of that situation and say, ‘Hey, are those things that I actually want to do? That I have an interest doing? That I would be willing to set aside the the right amount of time to do?’ – make a written list of what those are and answer honestly yes or no to each of those things; if there’s any no’s you need to be willing to say, ‘Hey, is that a show stopper or is there a strategy for me to assign or delegate or outsource that? Do I have enough money or margins in the business to cover that?’
The third consideration is strategy: Does it fit with what you are aiming to achieve?
Investing in a small website that doesn’t have proven returns yet might be a good way to learn but if it isn’t in alignment with your main strategy, it could end up being a waste of time. You need to be clear what you want to achieve – if your strategy is to build up a portfolio of websites, does this one have the synergy? Does it have a relationship to the other items in your portfolio? Can you leverage the same team? The same skills? The same process? Or can you not? It may not be a good fit even if it’s the cleverest website in the world and intriguing in different ways but if it does not match your portfolio it may not be a good investment.
If you’re looking at a side income or a little hobby or gaining the exposure to online businesses you need to consider if this website fits. If it’s too substantial or too different from what you’re interested in, it may not be a fit with your strategy. It’s important to evaluate the potential investment fully and check that box off before you go forward.
Next, consider the impact on your personal life
Any significant investment financially and time-wise in a business is going to impact other relationships that you have in your life whether it’s friends, kids, spouses or other family members. Whatever your commitments might be you need to take a realistic assessment of how much free time you have.
Maybe you have a full-time job and buying into a significant business would really impact your discretionary free time and as a result impact the relationship you have with other people. It’s important to think that through and see what strategies there might be to mitigate some of those impacts.
It could be that there’ll be significant negative impacts on your time to spend with your loved ones and conversely there may be positive impacts on other elements of your personal life. Look at both the positive and negative when trying to decide.
Lastly, are you compatible?
We all have resources, assets, experience, knowledge that we bring to the table and in some cases it may be closely related to the business you’re considering buying, in other cases it may be completely disparate. You may not have anything that you’re bringing to this business that is helpful and I don’t mean that in a negative way, it’s just that you’re going to be more compatible with certain businesses and less compatible with other ones. This is an important consideration particularly if you have more than one option you can consider.
Remember, good assessment leads to good investment
I’ll list these things again: Financial Analysis, is this right for you financially and your financial situation? It’s very important to do a work analysis – is this kind of work that you want to take on to your plate? And then your strategic analysis – does this fit what you are setting out to achieve? and then a personal relationship analysis – how will this affect your free time?
Using these five keys points you can assess whether a website is right for you from a personal point of view. There’s still the fundamental analysis you want to do where you complete the due diligence based on the numbers, the risk profile of the business, the valuation of the business which when combined with your assessment of the personal pro’s and con’s will help you decide whether to invest or not.