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Essential facts that will help you save money and increase profitability when buying a brand

Willing to invest in an existing brand and scale it up - Here's how to look for the right business and what you should pay attention to.

First, when reaching to buy an Ecom business, know that you can see and analyze almost all required data.

The business is managed by SWs, fully digital, including money transfers and orders. You can diligent it very well and collect all the numbers to help you decide whether you want this particular business.

Although numbers look significantly well; you should drill down and inspect a lot of different critical things,


Market research


Please make sure you check for the market opportunities, such as the number of sales in the category, is the niche is saturated, whether it is an electronic device that can be replaced tomorrow by a new version, what are the customers' satisfaction rate from the product being sold in that niche.

Research the market and look for the essential things for your business and expertise.


competitors research


This research will make you understand who and what competition you are against.

Like being said, "know your enemies." Check how big they are, how much they are investing in marketing, whether sales are coming from different platforms, how many products are included in their portfolio, whether the business is well founded, their product ranking, the number of reviews, whether they are controlling the market, do they have patents or specific TMs.


Target audience research


An essential part of the research is the target audience. You will search and learn about your potential buyers as much as possible.

Know the search terms they are using, the volume of sales, the importance of keywords volume, who they are, whom they are buying the product for, whether they are returning customers, and their feedback on the products they purchased.


PLC


When you plan to buy an existing brand with its product, research the products themself. It's nice to buy a known label with an excellent record and social proof, but even if the brand is well-known and holds a great selling history, you should look closely at the number of sales during the last year or months. Sometimes there is a slow in sales, and the reason for that implies that the products are no longer attractive as they used to be, and you can get stuck with lots of inventory that is no longer relevant.


Supplier


Your supplier is your business partner!

If you are a business/asset proprietor, you already know that having good associates or a third-party contractor is essential for the growth of a business. It would be best if you had trust between you and your partners. When you enjoy your business's benefits, your partners will too.

Before buying the business, make sure you have a good talk with the supplier and check if there are contracts and how long the brand owner has been working with them. You must understand that he will be there for you and take responsibility if something happens. You will need to know and feel the supplier's obligations towards the business and the willingness to grow with you.



ROI


When you look at the number shown on the PNL, ensure all expenses are there. The PNL should reflect the business profits and help you calculate your ROI. Add your costs and include your growth plans in it. How much do you plan on investing in this particular brand, and when do you plan on selling it? The profit and loss report should include marketing, influencers, content editing, graphics, adding more products to the portfolio, increasing the inventory, management fee, Etc.

After including your roadmap in the PNL, calculate and review your return and if the investment is worth the effort.

What are your plans? Are you looking to flip this business or enjoy monthly profits and grow more slowly?


Potential scaling


An essential part of a potential business opportunity is scaling up!

When going through the steps mentioned above, essential data will appear. Know where you want to go before buying the business. Ensure the options for scaling are significant. Buy a business only if you can see its future. Numbers are excellent, but we should look further at what we can do with the business. For example, an increase in rev share can be achieved by lowering the marketing budget and keeping the same number of units sold. Alternatively, we can reduce the COGS and increase impressions and conversion by editing the listings. We can use social media, improve the products, or add new variations.




Threats


We should pay attention to many things before buying a business.

Here are a couple of critical points to consider,


· Know whom you buy the business from - research the owner and asset and ensure it is legit.

· Payment - negotiate for the price and try to leave a small upfront and pay the balance after it is being well diligent.

· Use a third-party trustee for your funds.

· Check the registered brand owner and if it matches.

· Stock - make sure you are paying for a relevant inventory only.

· Check warnings and flags - see them on the platform and cases.

· Patents and IP - Ensure all is clean and no complaints are filed.

· Stock limitations - ensure you have the proper stock limit to send the goods.

· Stability - Look for a stable selling period and make sure it's still trendable



Best of luck,


Niv Michover

Ecreate Freedom LTD

info@ecreatefreedom.com

https://www.ecreatefreedom.com/

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