Before we purchased we sought some advice from an accountant friend (who happens to work with our wonderful accountant at KPMG) I spoke to several friends who would likely be in our target market, and asked the current owner as many questions as we could think of, we viewed financial statements, and checked the quality and condition of the stock that came with the business (well my excellent sister did that for us!)
Personally, I also put a great deal of faith in the opinion of my loyal fiancee. He manages our industrial refrigeration business "Excel" here in Hamilton. I am constantly in awe of his business mind and ability to make sound financial decisions. At times he seemed more keen than I was to buy the business!
Here are some things I would have researched further, in hindsight;
- Google Analytics. Find out everything you can about these for the current website. This will give you information on how many hits the site gets per month, what key words bring people to the site, what pages they are looking at and how long they are on your site for. From this information you will gain an overall picture of how well the site is working for the business - crucial if you are solely an online business.
- ask about the costs of running the website. This will include hosting fees (often around $60 incl. per month), any license fees or other associated fees. There maybe a support programme already in place with the web designer, find out the ongoing costs of this, and how long the contract is for. You are likely to need some support in the first month at least unless you are a website whizz. There maybe small changes you want to make, so your web company should be able to help.
- talk to the company that designed the site. You may already have a few ideas about the design or other functions you'd like to explore, and you will quickly learn if the company that did the design work is worthwhile continuing with or not. If they're not, be aware that a good design could cost upwards of $7000
- Check current stock. All the stock we purchased was in good condition but, much of it was sale stock or end of line items.
- ask the previous owner to notify all suppliers of your change of ownership, this just means its less of a surprise when you ring them to set up a new account!
I hope that is some help to some one out there! Or at least some interesting background info for those of you thinking about getting into e-commerce.