Things to know when preparing your eCommerce business for sale
Most eCommerce entrepreneurs want to sell their businesses, but they don’t know how this makes them run into loss after selling their business. If you know the trick, selling your business can give you lots of profits.
You have nothing to lose by selling your business to a potential buyer. But before you can sell your business successfully, there are some things you should know and take note of:
How much your business is worth?
First knowing how much your business is worth would give you a head start in how to sell your business. To know how much your business is worth, there are some factors you need to consider.
- Seller’s discretionary earnings (SDE): this is also known as the value of the owner’s benefit for the preceding 12 months. You can get this value by determining the amount left after paying the fixed costs of the business.
- Traffic trends
- Revenue trends
- Your total profit or benefits from the business
- If your business has a single revenue stream or several streams
- If your business has a clear path to growth.
Where you can sell your business
Where you can sell your depends on your type of business. Small businesses worth under $100,000 are best sold privately by the business owners though classified websites or forums.
Medium sized businesses worth $100,000 to $10m are best sold through brokers who would help the sellers find buyers and structure the deals.
Larger businesses worth over $10m are through investment banks or merger and acquisition companies.
People that can buy your business
There are lots of customers willing to buy eCommerce businesses. Many buyers fall into the following groups:
- Baby bookers
- Established internet entrepreneurs
- Private Equity companies
- Established brick and mortar Entrepreneurs
- Corporate guy
- Media companies.
Why most buyers say NO to some businesses
- They do not like your niche
- Your price is too high
- They do not like the business
- They don’t like the financial, product or branding condition of you business
- Issues with transferability.
What makes your business worth more?
The amount a customer is willing to pay depends on how much your business is worth. But what makes your business worth more? What makes your business worth more is by reducing the risk of your business crashing in the future by putting the following factors into your business:
- Clean legal history
- High percentage of repeat visitors
- High percentage of repeat sales
- Growth potential
- Growing or stable traffic from different sources
- Documented processes and system
- Brand with no legal concerns, copyright, trademark.
How long it will take to sell
The period it will take to sell off your business depends on the buyer and the seller. If the seller the buyer is in cordial agreement, the business might sell faster than you think. In order to sell your business fast, you need to be ready to sell. The selling process is straightforward, but it can be more complex depending on your business. The general selling process is structured like this:
- You decide to sell your business
- You get a valuation of your business
- You create a prospectus (all the figures and facts about your business)
- Find buyers for your business. You can get buyers by yourself or by using brokers
- Negotiate a suitable price with the buyer
- Transfer all the assets and money
- Train the new buyer on how to run the business successfully.
If you don’t have a business already and you want to go big, you can start by using an online store builder. It will help you with guidance and some of them are really easy to use, such as the ones offered by Shopify.
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