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Wednesday, October 5, 2022

How To Protect Your Money When Buying an Online Business

Buy an Online Business

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As an entrepreneur, you may think of buying an already existing online business. This may seem like an appealing investment as it saves time and money. However, it comes with its share of misfortune. It puts you at risk of losing your money. Besides, it may fail shortly after you own it. In some cases, this private sale may involve an untruthful party presenting fake reports regarding the online business. So, how do you get smart about the transfer? Please read on to discover the tips you can employ to ensure your money is safe even when buying an already existing online business. 

Go For an Escrow Service

Resorting to an escrow service is undoubtedly one of the best tips for protecting your money if you think of purchasing an already existing online business. In this case, there is the transfer of ownership, one of the hassles of this procedure. Understandably, both parties may be anxious and stressed about the same. After all, buying or selling an online business has its own share of uncertainty. How sure is the seller that the buyer will commit his funds? On the other hand, how sure is the buyer that the seller has taught or shared enough information regarding the online business?

While the buyer wants to get all that is needed to smoothly run an online business as well as the necessary knowledge, the seller wants to get the complete payment before being done with the transfer of ownership. Ensuring that both parties are satisfied and have no complaints can be tricky.

How To Protect Your Money When Buying an Online Business
How To Protect Your Money When Buying an Online Business

Thankfully, though, relying on an escrow service can help take the task off the seller and buyer’s shoulders. An escrow service will aid in “locking” the funds until the transition is complete. However, getting the convenience served by an escrow service has a catch attached to it. Typically, they are costly. The good thing is that with variety, you can check out the different price rates in the market so you make a reasonable pick.

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An escrow service is one way of ensuring the parties involved handle the process faster and even resolve any potential disputes that may arise in case a buyer and seller cannot get a resolution.

Have an Attorney

An attorney can come in handy if you do not want to involve an escrow service. This is a great replacement for an escrow service since their law license allows them to act as an escrow agent. So, why would you opt for one instead? An attorney will charge you for the services offered but is way cheaper than an escrow service.

Moreover, an attorney in charge of the buying/selling of the online business can offer advice where need be. Importantly, both parties may want to have their individual attorneys present to hold the funds until the transfer is complete.  In such a scenario, whatever agreement you have with the escrow company still stands. Therefore, an attorney can come in either as a replacement or as an addition to an escrow service.

Insist of a Physical Meet-Up

When you buy a virtual business, you may not involve a professional broker. Rather, you may opt to interact with the seller privately. If this is the case, you are at risk of interacting with an individual who may give you misleading information, or even hold back some important financial reports. Moreover, the transaction may involve parties not living in the same country. So, how do you ensure your money is safe? 

Rather than focusing on sending each other emails, having video calls or telephone calls, or any other form of online communication, why not arrange a face-to-face meet-up instead? This way, you get to interact physically with the one you are having this transfer with.

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Therefore, don’t let the convenience and efficiency of online-based communications overshadow your judgment. Organize and arrange with the buyer so you can meet in a physical setup, and get the tangible angle of the whole process. 

Don’t Pay The Full Amount

Regardless of your deal with the seller of the online business, never be too quick to pay the complete amount. Rather, you can have some money with you until 1 or 2 months after the transfer of the business. However, how much should you hold back?

This largely depends on the amount of the overall deal. You can only hold back a small portion of this, 10 to 20%. Remember, as a buyer, you can have an escrow service hold back a percentage of the funds.

Nonetheless, once there are funds you are holding back, you will notice the seller is more eager to help you transition and even train and help you progress faster and smoother with the business. Therefore, not paying your seller the full amount for the deal hastens his moves in a way.

Have a Clear and Detailed Transfer List

Earlier, detailed and proper planning is essential in the transfer of an online business from one owner to the next. Since this is an important step, ensure you have a draft of what your expectations are. Notably, make sure you have everything in your transfer list fulfilled and satisfied before you take complete ownership of the online business.

How To Protect Your Money When Buying an Online Business
How To Protect Your Money When Buying an Online Business

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 Moreover, find out what the expectations of the seller are prior so you don’t have clashing ideas at the point of transfer. You should write a list of the assets you want to be in your possession before you wind up the business transfer. So, whether you want a detailed list of the bank statements, invoices, email addresses, telephone numbers, each domain name, vendor contacts, etc., ensure you let the seller know this.

With this list, you can tick and counter-check that you agree on what you will own before you complete the business transfer.

Protect Your Money With Proper Planning 

One of the risky investments you can make as an entrepreneur is buying an already existing online business. This, however, does not mean there are no benefits associated with the same. It is faster and cheaper than starting your own business from scratch. The good thing is that when you apply the right tips and steps, you can keep your money safe amidst the transfer of ownership. So, if you are thinking of buying an online business, why not plan early and follow our 5 tips to protect your money?

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