Buying an existing online recuring business ...any problems I should be aware of?

10 replies
Hi

I am in the process of taking over an existing recurring income membership site. It hasn't been run very well but despite that has a surprisingly high membership retension rate because the product is good quality.

I do have one concern and am not sure how to handle it correctly: All of the recurring payments are linked to the owners paypal account and I am not sure if this can be transferred to me safely.

Are there any Warriors with experience in this sort of thing that might be able to give good advice plus any other concerns or things you think that I should be aware of as I am going to be paying a few thousand dollars for this and would hate anything to go wrong.

Thank you very much
Joe
#aware #business #buying #existing #online #problems #recuring
  • Profile picture of the author David Beroff
    If it's a business PayPal account, buy the business. If it's their personal PayPal account, you're going to have to ask each member to change their subscription, which will of course raise questions, and you'll lose a certain percentage of the customers. On the plus side, the people who are left are the ones who really see value in the arrangement.
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    • Profile picture of the author Joe Broon
      Originally Posted by David Beroff View Post

      If it's a business PayPal account, buy the business. If it's their personal PayPal account, you're going to have to ask each member to change their subscription, which will of course raise questions, and you'll lose a certain percentage of the customers. On the plus side, the people who are left are the ones who really see value in the arrangement.
      AH! Thank you David for your reply. That is just the sort of advice I needed.

      It is a verified Paypal account but from what I understand it is not a business account as such so that could cause problems.

      Another issue which could throw a spanner in the works is that the owner never set up a mailing list for the members. They literally pay their subscription free automatically via paypal then get access to the product at the private membership site.

      I am a member myself and have been very frustrated by the way it was run and that is why I want to buy the business but it is a bit of a nightmare to get everything in place.

      Regards

      Joe
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      • Profile picture of the author Kay King
        It's a forum - so you can introduce yourself and make promises for those who stay....on the forum. Start the "list" later.

        If poor management has a good retention rate....that's a good sign for a new owner.

        You can USE the membership forum to introduce the "new owner" and launch a transition. That would include members clicking a clink in YOUR announcement and re-subscribing with paypal - a really good freebie offer to get people to do that - and include email list signup in that funnel.

        Planned well - it works fine and you lose minimal members. That's especially true if you have good plans and announcement for what members can expect with you as the owner.
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        • Profile picture of the author David Beroff
          If the forum software took the member's email address at registration, (which it almost would've had to have done these days), then you don't need to build a separate email list. In fact, I feel that doing so would be counterproductive. You already have a database with everyone's email address, so use that to manage your mailings. To do otherwise would, once again, dilute your core asset.
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          • Profile picture of the author Joe Broon
            Originally Posted by David Beroff View Post

            If the forum software took the member's email address at registration, (which it almost would've had to have done these days), then you don't need to build a separate email list. In fact, I feel that doing so would be counterproductive. You already have a database with everyone's email address, so use that to manage your mailings. To do otherwise would, once again, dilute your core asset.
            Hi David

            I am not sure if this answers your question but the only emails on the list are the subscribers Paypal email addresses and from what I understand, he had problems notifying them of certain changes because not everybody read their emails from that account.

            Does that make sense?

            As you say, I don't want to cause any more damage to the business.

            Many thanks

            Joe
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        • Profile picture of the author Joe Broon
          Originally Posted by Kay King View Post

          It's a forum - so you can introduce yourself and make promises for those who stay....on the forum. Start the "list" later.

          If poor management has a good retention rate....that's a good sign for a new owner.

          You can USE the membership forum to introduce the "new owner" and launch a transition. That would include members clicking a clink in YOUR announcement and re-subscribing with paypal - a really good freebie offer to get people to do that - and include email list signup in that funnel.

          Planned well - it works fine and you lose minimal members. That's especially true if you have good plans and announcement for what members can expect with you as the owner.
          Hi Kay

          Again, thanks for taking the time to reply. I really do appreciate it as it is quite a big investment for me and want to handle it properly.

          Unfortunately it does not have a forum....just a download area where members get access and download the product they pay for each month.

          However, I could do what you suggest by creating an announcement and implementing your suggestion, and ask the owner to include it in the download pack.

          That is a good suggestion Kay and definitely something I will be doing.

          I think I should mention one more thing in case any other members have some good suggestions on how to handle this:

          Throughout the history of the membership site which started in 2012 lots of subscribers pay different fees for exactly the same product ranging from $6.95 for members who got in on a special promotion and up to $14.99.

          I would like all members to be on the same rate but I wonder how likely it would be for the members paying the lower amount (about 350 members) will pay the higher amount of which only about 120 pay each month.

          If any Warriors have some suggestions on how to handle this I would be very grateful.

          Regards

          Joe
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          • Profile picture of the author xy7tina
            Hi,

            They may pay the higher rate if they get more bang for their buck so to speak- as part of your transition you could announce some package restructuring - making it a little better for all the users.
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          • Profile picture of the author David Beroff
            Does the current owner have (in their PayPal control panel) a list of all of the subscriptions? They would almost have to. Each PayPal account is an email address, and most of the time, that's the person's "real" email. (Yeah, yeah, it doesn't have to be, but....) So, even there, you have a list of sorts.

            Do you have the right to email them? My personal opinion is absolutely yes: You need to be able to contact them for financial transactional matters, and this switch certainly is that. Now, moving forward, your emails would be more marketing in nature, and that's the point where you'll need to ask them to subscribe. The easiest way to do this is to make their next month's landing page (where they normally get their goods) to be your list subscription page, i.e., if you want this month's goodies, you need to tell me who you are. Yes, there'd be a checkbox that they could uncheck if they decline to subscribe... so give them a good reason!
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            • Profile picture of the author Kay King
              Unfortunately it does not have a forum....just a download area where members get access and download the product they pay for each month.

              However, I could do what you suggest by creating an announcement and implementing your suggestion, and ask the owner to include it in the download pack.
              Make it a "special download pack" with freebies, plans, etc - and a link TO paypal. I'd still make it a simple funnel where they are re-subscribing - AND verifying joining an email list. The only glitch there is many people prefer NOT to use the paypal address as their regular email - so you end up with email addresses on your list that don't match your membership records. Give that some thought along the way - there are easy ways to make it work.

              I still think a list is a good idea - you could probably email the members as it is but to use a good autoresponder it's best they opt in. That should be the least of the hurdles as it can be a promise of "big announcements" or "new owner specials". People opt in when they see a benefit to THEM - not because you want them to.

              Why do you want all to have the same $$ level? Why not have 2 levels - one silver and one gold? Or call the high priced level "premium membership" and have a few extra downloads for them each month.

              The people you are most likely to lose will be those at the lower end IF you raise their fees. People try to the get "most money" from memberships but if the cost is low people tend to stay with it much longer.

              One way to raise the fees if that's what you decide on - is to start with the fees as they are now - give 3-4 months of improved management, better quality materials...THEN announce a date when the fees will increased and keep the increase to a minimum. That gives you time to build rapport and will minimize the dropouts.

              Edit: NO reason the list signup shouldn't be part of the "introduction of new owner" download link. That gives you a fast list because people will sign up to get "the insider news" and you'll have a list to contact if you see the dropout rate increasing. It gives you the ability to pivot and add bonuses if you need to.
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              Saving one dog will not change the world - but the world changes forever for that one dog
              ***
              Please do not 'release balloons' for celebrations. The balloons and trailing ribbons entangle birds and kill wildlife and livestock that think the balloons are food.
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  • If he runs a business, he probably has a business paypal account.

    Just buy the details from him for the whole paypal account.
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