The internet has revolutionized the way people do business. A significant amount of the buying and selling people and businesses engage in is now done online. Look around you. Almost everyone is staring at their computer or phone screen. You can make money if you can get some of this attention. Buying and selling online businesses is like flipping real estate.

Fundamentally, buying and selling online businesses is just like any other business you see offline. All you have to do is buy a product at a lower price and sell at a price higher than the one you bought it.

To put it simply, think of it like flipping real estate. Actually, online businesses can provide higher returns than ‘real’ real estate within even shorter time frames.

Flipping Marketplaces

There are a number of reputable marketplaces you can find and evaluate online businesses available for sale. One of the notable sites is Flippa.com. Flippa.com is secure and safe as long as you go about the process carefully and follow all the instructions they give to stay safe and not fall for scams.

Some of the sites you can buy and sell online businesses include:

• Flippa.com
• Sedo.com
• Websitebroker.com
• BuySellWebsite.com
• Dealasite.com
• Warriorforum.com

Some of the sites utilize Escrow as an added layer of security to ensure you don’t lose your money.

Understanding Online Business Models

Before you can buy and flip an online business, you must understand how online businesses work. If you don’t know how online businesses work, you won’t be able to determine the true value of a business to know whether or not it is fairly priced. You want to buy low and sell high.

The four most common business models used by online businesses are:

1. Selling their own physical or digital products.
2. Acting as an affiliate and selling another company’s products on commission.
3. Selling advertisement spots.
4. Selling subscriptions.

An online business can use one model or a mixture of any of the four. The optimal decision will depend on your target audience and the business goals you are trying to achieve.

Raising the Value of the Business

Needless to say, to turn a significant profit, you will need to raise the value of the business so it is worth more than you bought it for.

Online businesses are usually valued using profit multiples or revenue multiples. If you are reading this, the person you will be selling to will probably value your business as a multiple of the profits. For instance, if you make $3,000 in profits per month and you choose to value your business at 12X the monthly profit, your business will be worth $36,000.

If you will be using profits to value your business, your only options to increase the value of your business is to either increase revenues or cut costs. Profit is calculated as revenues minus costs/expenses.

The Warren Buffet Rule

Warren Buffet is arguably the most successful investor on the planet. One of the investing rules he abides by when investing is to only invest in things they understand. This is one of the reasons Warren Buffet and Charlie Munger, his business partner, have largely stayed away from tech startups.

Since you will have to increase the value of the online business you buy before you can flip it for a profit, it will be unwise to invest in areas you have absolutely no interest or knowledge in. You will be better off investing in an online business you can excel in given your current knowledge and abilities.