4 Things You Didn’t Know About Running an Online Business
More people than ever before jump on the bandwagon to buy an online business. Some do it for the cash flow, others for the ‘lifestyle benefits’, and a few because that’s what they’re good at.
Even though the process of buying an online business has gotten very simple, and brokers would like you to believe that so is owning an operating one, there are some things that a lot of people who are new to the industry don’t account with or discover until it’s too late.
1. The REAL ‘Internet Entrepreneur Lifestyle’
If you’re one of the many people who want to switch their business online because of the ‘amazing lifestyle’ that running an online business offers then chances are that you’re in for a nasty surprise.
Having been an ‘online entrepreneur’ for over a decade, I keep getting amazed by the major misconception that people have when it comes to the lifestyle. Whenever I mention the online nature of my business to ‘offline’ people, most automatically imagine that I spend most of my days on the beach with laptop on my lap and a glass of margarita beside me.
The reality? I go to the office at 8am like anybody else, with the main difference being that my workday seldom ends at 5pm as things need to get done and there’s no-one there to bail you out for having a lazy day.
Sure, I could do most of what I do from pretty much any place in the world, but I simply don’t want to, and don’t know anybody who does after they’ve tried it for a couple of weeks. Working while travelling the world may sound like a great idea on the surface, but it actually reduces your productivity to the bear minimum and as a result your business will suffer.
It’s also important to understand that at one point you’re going to need an office with employees, as every business needs to grow, and you can remain a ‘solo online entrepreneur’ only if your business remains tiny – making it essentially unsuccessful.
2. Legal & Accounting
For many, however, it’s something that they don’t think about at all until the very last minute.
Whilst owning and operating a website may seem simple, the last thing you want to happen is discover at the end of the year that the majority of your profits will be eaten up by taxes or worse – unknowingly have your website break a law and as a result lose your house and your car!
It’s perfectly understandable why many pay little to no attention to those things until it’s too late – after all, paying thousands in lawyer and accountant fees never has any direct monetary return so the money always seems better spent on marketing campaigns or website overhauls. But it’s the potential loss that matters, so think of it like an insurance policy.
If you’re new to business – online or otherwise – then I very strongly suggest you to ALWAYS speak to a local lawyer in your area before going through with an acquisition, make sure that your corporate structure is solid (often it’s as simple as registering one LLC), and make sure to not be a cheapskate when it comes to picking an accountant as the difference between a good accountant and a slightly worse and cheaper one can mean large amounts of money down the line.
3. Google is NOT Your Friend
Many entrepreneurs who switch from the bricks-and-mortar business world to online understand the business part of things extremely well, but lack in depth knowledge about things specific to online businesses.
One of these things is traffic and its sustainability in the long run. Web traffic often gets compared to ‘foot traffic’ for bricks-and-mortar businesses, but in my opinion this comparison is entirely flawed as the risk profiles of the two are night and day.
If you’re running a Subway franchise on a busy street in a relatively large city then how many people pass your shop each day is fairly predictable, and no single event is likely to have an effect on this. Sure, a competitor might open up next door to you but in terms of overall traffic, this is irrelevant.
With websites on the other hand, in most cases a large junk of their traffic comes from search engines like Google. Whilst this traffic may appear as stable on the surface, in reality you have to understand that all of this is at the discretion of a single for-profit company who has no motivation of “doing right by you”. As history has shown repeatedly, it’s actually quite the opposite, and Google is in the habit of constantly changing things over, which often pushes websites that have had stable traffic for years on end completely off their rankings for seemingly no reason.
Needless to say, you can still make an educated guess based on historical traffic and ranking levels, but you need to always keep in mind that what’s there today can easily disappear overnight and run your business accordingly, by diversifying as much as possible.
4. Expecting the Unexpected
When dealing with a seasoned seller or a broker it’s easy to believe that running a web business is a simple process that often takes only a few hours a day of your time at most. And even better – it doesn’t require any IT knowledge at all!
While in some cases that’s indeed the case and the day-to-day operations of the business that you’re looking at are very straightforward, one thing that sellers and broker will never tell you is the unexpected things that tend to happen.
Sites get hacked. Servers blow up. Software updates break things.
If you’re in online business then things like this are something you’ll encounter often, and in many cases they can eat up significant time, money and brain cells.
The good news is that you can protect yourself against all of those things, but only if you pay attention to them early enough. Regardless of how simple and easy a business appears on the surface, always discuss it through with a professional and get their take on things – especially on the potential risks and ‘out of ordinary’ things that may happen.
It’s also a good idea to always have “a guy” standing by for every possible scenario you can think of, as then you can have critical issues addressed right away without your site being offline for days or weeks.
Have I missed anything?
If you’ve bought an online business before and have been surprised by something you didn’t know before then let us know in the comments!