Do economic woes equate to a buyers market?
With the news story of the week once again shifting from political pundits discussing “lipstick on a pig” as a reality show diversion to influence silly voters to the cold hard facts that our economy is in worse shape than otherwise expected, voters as well as buyers and sellers of businesses for sale are getting a rude awakening if they were not paying attention.
We try to explain to our selling clients that part of their selling strategy, including finding that magic listing number that is fair for both parties, should be looking at the overall market condition and assessing the risks as well as the rewards of their website business model. Any prudent buyer will be considering all the elements of the market niche, current sales trends and future exposure in a weakening economy. If these are adressed up front, the opportunity will tend to have greater resilience to the swings on wall street and the ensuing ‘fear and loathing’ it produces to the masses in the subsequent main stream media frenzy about the latest bankruptcy.
In todays marketplace we are seeing more sellers listing while the buyers are tending to be much more cautious and choosey. Any internet business is going to be ultimately compared to other internet opportunities in terms of stability, current revenue and profit trends, current and historic traffic, the market niche the business is in, and the revenue model of the business. All businesses will be under greater scrutiny to assess their future market resilience.
As in any economic down turn cycle, there are going to be business opportunities that will thrive, remain stable and some that will be more affected. An ecommerce site selling necessities, or like a couple of our clients, products that are in high demand like alternative energy supplies, are seeing good growth, whereas a luxury goods retailer may be seeing sales trending south as consumers tighten up on their discretionary spending and start saving more.
So, these types of market conditions tend to favor the buyers because they have more choice and will ultimately cherry pick the best businesses that are showing growth, both revenue and profit-wise, despite the economy, have a predictable business model and longer history, loyal customers, strong fundamentals including good natural search engine rankings, unique and diverse product mix that is higher on the needs list for consumers, good domain name, etc.
For sellers with great established websites for sale, these market conditions actually favor your successful exit, as your website business will stack up much better against more mediocre internet businesses that are not as strong and resilient to this economic ‘meltdown’ as has so eloquently been touted by the mainstream media. To the shrewd investor/buyer this can often be one of the best times to snap up great online businesses at a great value.
The cream will always rise to the top in any market but especially in tough economic times – but that means the best buyers and sellers will consumate great deals from the masses of slock that is being pitched online. At Websiteproperties.com we endeavor to represent only what we consider to be the best internet businesses available at fair market prices that insure both buyers and sellers come out winners in any economy.