Team eCommerce Next interviewed Blake Hutchison from Flippa to get more insights on best site to buy or sell an online business.Following is our interview with him:
Why is Flippa the best site to buy or sell an online business?
Flippa offers more choice and more reach. We do more deals with Flippa’s platform offering unparalleled access to businesses of all values. So far this year, the biggest sale was just over $30M and we have a very active deal hungry buying community.
Plus, it’s a market network and it’s much more than an online brokerage. Flippa is an intelligent valuations engine and deal management platform with due-diligence, legal services and integrated escrow and payments all in one easy to use environment.
Is digital entrepreneurship the next big thing in 2022? What is driving growth?
As reported by theUS Census Bureau, analyzed by the Economic Innovation Group, 2021 was a record year for business starts. To the end of Q3, there were 1.4M applications filed for the formation of new businesses – the most through the third quarter for any year on record and we would expect this trend to continue.
There’s three driving factors, one being necessity. Job recovery from the pandemic is inching forward but the unemployment rate is still higher than prior to the pandemic. Accordingly, this drives people to business ownership.
Other factors are ease of entry and access to capital. The platform economy – where platforms like Amazon and YouTube facilitate trade between buyer and business owner or creator – are simple to learn and there’s now major support systems in place to help people excel. Plus, there’s an entire ecosystem now set up to access capital for growth or in many cases for acquisition entrepreneurship – providers will actually give you money to buy businesses.
How do you use Flippa?
It’s a flexible solution. Sellers can sell direct or use Flippa’s agent and broker network. Buyers in turn, can work with a relationship manager or manage their own deal. It’s analogous to real estate. Think of Flippa as Zillow for buying and selling a startup or online business.
What trends are you seeing on the site?
Overall, there is more deal value than ever before. In Q3, there was $155M in deal value listed and in Q4 this jumped to $204M. We expect more and more sellers to seek a pathway to exit as buyer demand hunts out deal makers.
Additionally, there’s an appetite among Ecommerce business owners to acquire content sites. Many are looking for diversified pathways to user acquisition and some are finding that Facebook and Google paid ads are becoming less effective and more expensive with increased competition. Buying a content site enables you to own a community and often can be a more efficient long term pathway to driving loyalty and brand engagement.
Can you share highlights about your recent announcement?
We launched a curated experts marketplace to help with the growth ambitions of our buyer and investor network. As a growing market network and a community of 3M aspiring entrepreneurs, we now want to help businesses to thrive. We’ve released the Partner Market and it’s much needed growth fuel for business owners. It’s a new marketplace arm of Flippa, providing a curated network of experts and agencies aimed at new business owners (buyers on Flippa) who need SEO, content marketing, graphic design, virtual assistant services and more.
The community asked for it. While business ownership is more accessible than ever before we shouldn’t ignore how hard it is to grow. We want to help in that regard.
What are some best practices for buying an online business?
My first time buyer tips are:
a) Buy to optimize. Look for online businesses where despite strong performance there’s clear room for improvement. Think about things like design and the user-experience, look at things like return-on-ad-spend (ROAS) and how this can be improved through better ad copy and creative, review the assets current life cycle marketing program etc. It differs by business model of course.
b) Know the metrics that matter. Each business model differs. In a SaaS context, I would keep a close eye on Lifetime Value and Churn, whereas in Ecommerce I like to look at refund rates.
c) Consistency is gold. When buying your first online business I wouldn’t worry about profitability so much as I would consistent performance. You can always drive profitability through a cost base review. Review the trailing 18 month performance and interrogate where there’s major dips. It’s often not a major concern but very worthwhile investigating.
Overall this is a good comprehensive guide for first time buyers.
What is the #1 mistake owners make when selling their online business?
Overestimating value. You are setting yourself up for a rude shock if you think Nasdaq valuations or venture valuations are indicative. They are not but the good news is that valuations are rising as more people start to appreciate online businesses and the scale of returns. Best thing to do is to start with a valuation here.
What can we expect to see from Flippa in the next year? What are your plans?
Our vision is big and we will achieve it. It’s to democratise the exit and provide an accessible pathway to business ownership. This year it’s all about matching high quality business owners to acquisition fit buyers. We already offer unparalleled reach to both buyers and sellers of startups and online businesses…so it’s about improving the efficiency of the service end-to-end.
About Blake Hutchison
Blake is the CEO of Flippa. the #1 marketplace to buy and sell sites, stores, social media accounts and online businesses. Blake has worked on leadership teams assisting in fast growth businesses including Xero and Luxury Escapes. Among his start up experience he also founded a company…he then used Flippa to sell the business.
Flippa is the #1 global online platform to buy and sell digital real estate, such as websites, eCommerce stores, apps, and online businesses. Flippa has more buyers than any other platform, with 600,000 monthly searches from investors seeking to acquire businesses, and connects business owners with a pathway to exit. To learn more visit Flippa.com