It may sound a bit too dramatic, but this is the main rule regulating the sale and purchase of a business, website, domain, software, or other sorts of services. You see, when it comes to business, website, domain selling, etc. the process and deal is not covered by any consumer right legislation. Unlike buying goods from shops and stores, you cannot return the business, website, or domain you have just bought after two weeks, for example. Therefore, as a buyer, it is entirely your responsibility to make sure you are buying the business, domain, website, service, or software you are expecting and hoping for. Therefore, you are highly recommended and encouraged to conduct due diligence as it will give you a good idea of the business you are about to buy.
What due diligence means is an in-depth and detailed appraisal of a business, be it a classic one, or in the form of an app, website, software, service, or franchise that is conducted prior to the purchase. It is important because it gives you a better idea about a business, therefore it should be carried on thoroughly. The main advantage of conducting due diligence before investing your money into purchasing a new business, website, domain, software, or app is not only the opportunity to get a better idea of a business’ value and potential but also reveal some of the negative aspects of it the seller could be hiding from you.
However, if there is something wrong with that said business, it doesn’t automatically mean you don’t have to buy it. It is entirely up to you and your decision and if you decide to continue with the purchase, you have some room for more negotiations and eventually negotiating a lower price. You can also force seller to provide guarantees. Before you conduct due diligence and ask for warranties and guarantees, always make sure to get a legal advice.
As a buyer of a business, website, service, app, or software, you are always recommended to get professional advice and help from experts such as solicitors, lawyers, accountants, business and legal consultants when you are conducting due diligence. It may cost you a bit of money on top, but make sure you don’t cut corners on this one, because you may suffer from the consequences later and regret the purchase you’ve made.
Too Good to Be True
If something looks too good to be true, it usually is. For example, if you are buying a going concern, due diligence will be pretty much very straight forward, largely based on the fact there is a current record of the performance of the business, website, service, or app. The same is not going to apply for businesses that are not trading or dormant, or when it comes to emerging businesses such as starter websites, new apps and software, etc.
When you are purchasing a business, you should be entirely aware of what you are buying. In case you don’t understand how the business works and how it makes money, you better walk away. This applies especially to more non-conventional types of businesses such as domains, apps, software, starter websites, other services and is even more essential for home-based businesses such as drop-ship, affiliate marketing, other similar types. Therefore, you are always recommended to get independent advice from a professional in the field.