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4 Reasons an Online Business Is a Solid Investment

4 Reasons an Online Business Is a Solid Investment
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Are you considering buying an online business? As you are likely aware, there are a variety of options available. This makes it challenging to come to a buying decision that accurately reflects your priorities.

Not only will you be looking at what kind of business model makes the most sense for you, you will also be considering what industry to invest in, and what you hope to achieve and experience with your investment money.

Though narrowing down your prospects could prove challenging no matter what, there are several compelling reasons to go with an online business over an offline one. Consider the following.

1. Reduced overhead

If your online business is set up correctly, there will be fewer expenses that go along with it. This is particularly true in cases where physical products, distribution, rent and other costs are non-existent.

There is a decidedly different focus with online businesses, where outreach and content creation are higher priorities. Though content generation, SEO, social media and other marketing channels may require a considerable time investment, the resources required are going to be significantly less than that of a brick-and-mortar business with physical assets.

Of course, reduced overhead often translates to higher profit margins as well. There are a myriad of unique monetization methods with online businesses, and this is another factor that makes the web all the more attractive.

Related: 5 Ways for Online Entrepreneurs to Stand Out

2. Increased adaptability

Marketing is one of the most important components to any business. What makes marketing online more attractive than offline marketing is that tracking and measuring your return on investment is much easier. By taking advantage of the abundance of tools and data available, you can adapt fast and change your approach and strategies as needed.

If you have two equally good ideas and you're not sure which to go with, you can split test your ads, email campaigns, sales pages, order forms and other initiatives.

By taking advantage of tools such as Google Analytics, you can monitor changes in real time. If one traffic strategy isn't working, you can try another. If conversion rates are low, you can make some tweaks to your website to increase conversion.

In addition, targeting specific demographics has never been easier, especially with the rise of social media advertising. You can define the audience you want to target, in exacting detail, and begin to market to the people that are most likely to be interested in your product or service offering.

Finally, there are a tremendous number of marketing channels you can take advantage of. Blogs, podcasts, videos, social media, email campaigns, white papers, ebooks and a variety of other assets can all be used to attract your target profile.

In short, all of these elements allow for more adaptability. With an online business, you can quickly identify what is working and what isn't, and tweak your strategy on the fly.

3. Added flexibility

With an offline business, you are often tied to a physical location. At times, there are advantages to being positioned in a specific part of the world, but the added flexibility of an online business is attractive to many entrepreneurs and investors.

With an online business, if you need to work from home, you can. You can also do your work from just about anywhere in the world, as long as you have a reliable Internet connection. Passive income is a draw for many, and for some, a reality.

A well-established online business may not even require employees and a business infrastructure to maintain, support and even grow. The time commitment of a business owner can also be relatively low with the right business model.

If you want to be able to sustain a profitable business while exploring other ventures, or if you want to have more time for yourself and your family, the flexibility of an online business will prove invaluable to you.

Related: 6 Overlooked Ways to Vastly Boost Traffic to Your Ecommerce Site

4. Lower risk

A shrewd investor will be wary of taking risks that could end up costing them in the long run. You can't necessarily pick a winner every time, but by doing your due diligence, you can mitigate risky and unwise investments.

For the most part, online businesses are lower risk than brick-and-mortar businesses. Starting an online business doesn't have to cost a lot, and because of its inherent adaptability, it is possible to turn a losing business into a profitable one in a relatively short amount of time.

This doesn't completely eliminate the possibility of failure, but it does mean that, if necessary, strategizing and starting over isn't that hard. There are a variety of ways to make money online, and finding the right fit could be a matter of experimentation.  

Online businesses are also more liquid than you might think. There is a lot that can go into selling a business that is more geographically-dependent and operationally complex. Because online businesses generally aren't tied to a location, and they require less work to maintain, there are a lot of buyers looking for the opportunity to purchase a business that's profitable out of the box.

The due diligence period on online businesses is also much shorter than on physical businesses. Ultimately, online business is less risky than offline business.

Starting a new business vs. buying an existing one

You've now had the chance to learn about the primary advantages of investing in an online business over an offline business. However, you might still be wondering whether you should start a new business or buy an existing one.

Starting a new business can be both time and money intensive. Not only that, but your knowledge and experience in any given field will dictate how well you can run a given business. This could result in "business blindness" in the sense that you might miss potential opportunities because of your partiality towards certain business models or industries over others.

Here are several reasons why buying a pre-existing business is a better decision:

  • The business model is proven and profitable. You don't have to spend time split testing, experimenting and tweaking your way to a profitable business.
  • Since you are coming to the business with a fresh perspective, you have a better chance at seeing what the previous owner may have missed.
  • You can gain knowledge and experience in the specific industry the business is in.
  • The business comes with assets you can leverage.

Final thoughts

Hopefully you now see why an online business is a solid investment.

Every entrepreneur and investor has to consider how much time they have, and how much money they're willing to risk.

However, as you begin to consider the options available to you, you will see that online businesses are incredibly adaptable. Buying a pre-existing business can be advantageous for many reasons, as it will allow you to leverage the resources available to you, and build towards the best possible outcome. If you want to learn more, we’ve put together a free, more advanced guide.

Related: 10 Hacks to Help Your Website Generate More Leads, Sales and Revenue