The sale of ShipYourEnemiesGlitter.com has been widely covered across the web, with a number of high profile publications discussing the sale. As an online business broker, I look at thousands of websites a year and have learned the right questions to ask when dealing with sellers of businesses. This particular site caught my eye, and I can’t help thinking the buyer has wasted his money.
Here are three easy questions the buyer should have asked:
1. How much time does the business take to run?
In the auction listing, site founder Mathew Carpenter claims “close to no time required [to run the business] if the owner decides to outsource.” No businesses take zero time to run, especially in the ecommerce space, which has customers, suppliers and other third parties to deal with. As he had never actually shipped the products that had been ordered, it was impossible for him to predict how long it would take to run.
At the start of the sales process, Carpenter also said that the website went viral by accident, which is clearly not the case. I would make an educated guess that he spent days planning and emailing journalists to try get attention. Time marketing a business should be taken into account. Misleading answers here are always a red flag.
2. What are the legal implications of owning the business?
Shipping an envelope full of glitter to an “enemy” might sound like a funny idea, and the concept certainly is, but in reality it’s going to annoy a lot of people. All it takes is for it to damage some expensive machinery, such as a computer, and there are going to be problems. Nothing on the legal front would have occurred so far as no letters had been shipped, but before bidding, the buyer should definitely have consulted a good attorney if the seller had not already done so.
3. How many people have visited the website since launch?
At the time of the auction starting, the website only had two days of web traffic statistics at a stage of huge popularity. The auction lasted for seven days, meaning that the initial press hype would have died down and so would the number of visitors to the website. For the owner to break even at the current rate of ordering, it would take around 6 million visitors. That's a lot of glitter fans with enemies to find!
Due diligence (asking questions like above) is not as fun as messing around with glitter, but it is an important part of buying a business. It relies on common sense and not becoming emotionally attached to a particular sale (or auction).
What questions would you have asked? Let me know in the comments section below.