Selling your online business is a unique experience, differing significantly from a brick-and-mortar store. Companies around the globe have invested tremendous resources to enhance their e-commerce presence, and for good reason too. Unlike brick-and-mortar stores, e-commerce offers endless opportunities to generate new revenue streams; from accessing an international pool of customers at any time of the day or night. As a result, investor interest in e-commerce businesses has increased significantly over the last decade.
Entrepreneurs sell their online businesses for a variety of reasons. Regardless of why you’re thinking of selling your business, there are a few things you should know to ensure a seamless experience. First, there is no shortage of strategic buyers looking to acquire great e-commerce businesses across a variety revenue figures, product categories, and geographies. As such, it is important to take your time and get to know whoever you’re working with. However, it is critical to ensure that your business is positioned as a desirable acquisition. This guide will help you answer all the questions you may have while selling an online business.
What kinds of businesses can you sell online?
The most common kinds of online businesses that you can sell online include –
Shopify/E-Commerce Stores – Online commerce platforms that allow anyone to set up their online store and sell products.
Dropshipping Business – These businesses do not hold any inventory and run on a retail fulfillment method. Dropshipping sites often purchase their products from third-party manufacturers who then fulfill the orders.
Amazon Affiliate Sites – These websites make money via commissions generated through their Amazon Associates Affiliate program.
Amazon FBA – Amazon FBA is how the e-commerce giant allows third-party businesses to implement automation in their order-fulfillment and shipping services. Amazon handles the shipping while the seller simply sells their product. Click here to evaluate your Amazon FBA business worth and sell it online.
Mobile Applications – Applications or software that are developed for smartphones or tablets.
How can you prepare your online business to be sold?
Whether or not selling your online business is part of your plan, it is always a good idea to be prepared and consider your business’ performance. If you are ready to bid farewell to your online business, it’s crucial to begin way before starting the selling process. There are certain steps that you should implement:
- Collect accurate data about your business – Before selling your online business, you must be ready with precise website traffic data. Website traffic is crucial for a potential buyer to judge your conversion rates and online business’ worth. Obviously, you won’t reveal these details until a later stage in the selling process, but you should arm yourself with all the information.
- Keep your financial information ready – Records that prove your profitability are the best arrows in your quiver. Potential buyers would always want to see your business’ numbers, such as revenues, gross margin, and profits. It is wise to keep this information handy, especially your P&L statements.
- Creating Standard Operating Procedures or SOPs – SOPs are a detailed operating manual for multiple aspects of your business. They provide an in-depth understanding of your business’ operation, like how you handle various tasks. It helps a potential buyer see how the business functions and if it is worth investing in.
Different ways to List your online business for sale
The channel you choose for selling your online business can end up determining the value you get. Finding the safest hands to list your business in is another tricky part of the process. Generally, you have three channels or buyers to choose from:
- Sell it privately – If you’re looking to accomplish the sale without investing many resources, a private sale is the way to go. It helps you save on brokerage, and you’re solely responsible for listing, finding buyers, transferring data, and negotiating the price. You get to drive the sale without any interference.
- Sell it to a competitor – Selling to a direct competitor may help you get the best value for your business. A rival company won’t let go of the opportunity to reduce their competition. However, if you plan to stay in the same industry, this may not be a good idea as confidential information will change hands.
- Sell it via a broker – Getting a broker can facilitate the selling process quickly. A broker can easily put you in touch with potential buyers, lead the negotiations, and ensure you get paid on time and in full. If you’ve never sold an online business before, a broker’s experience can come in handy to zero in on suitable buyers.
Is it the right time to list your online business for sale?
The right time to sell your online business depends on your goals and your desired selling price. You need to know the exact amount of monthly profit that you should be making and what you can do for your business to make that profit. Here’s an effective formula to decide your listing price-
[6-12 Months’ Average Net Profit] x (20 to 60+) = Listing Price
The two factors here are
- The average net monthly profit over a period of 12 months, at the least, and
- The Sales Multiple
The sales multiple can depend on many factors and vary between 20 to 60x+. If you want to sell your business profitably, it is best to start with your estimated buyout price and work your way backward. A clear monthly revenue and profit target will help you understand how much you need to earn and what steps can help you accomplish this. A six-month time period is optimal to evaluate your business’ performance and start preparing to sell.
How to list your online business for sale
The journey of selling your business online can be an arduous one. The following steps will help you understand how you can sell your business online.
- Finding the right buyer – Selling privately works best with reliable platforms. unybrands can help you find the right buyer for your business. If you’ve decided to find a broker, choosing one based on the quantum of relevant experience can be an excellent strategy.
- Set a Hard Minimum Sale Price – This is very important. If you do not set a price that you are not willing to go below, you might lose out on profit during the course of protracted negotiations.
- Due Diligence – Get all of your important data, documents, and numbers vetted with the help of a broker. The process can take anywhere between two to four months, depending on the size of your business. Once the due diligence is over, it is time for contract negotiation. Brokers are well experienced with negotiations and can really be an asset during this process. If you are selling your business privately, it is best to take an attorney’s help to draft a fair legal agreement for both parties.
- Closing and Transfers – As a responsible business owner, you should ensure that the required transfers are made. Try introducing the teams to the new owners for a smooth transition.
Why you should sell your online business to unybrands
You want to find a buyer that is trustworthy and will take your online business to new heights. At unybrands, we achieve this by having the best experts nurture your business after the acquisition. We understand the power and value of digital brands. Our business decisions are powered by data and technology, helping us explore the best growth opportunities for your brand. We customize our acquisition process according to the online business for sale and make every step of the journey seamless.
Integrity and honesty are at the core of our approach, and we believe in building trust with our sellers. As serial acquirers of online businesses, we work fast and reliably. We have a Buy-and-Build team of experts who guide you through the entire acquisition process.
Our focus has always been on long-term growth, responsibility, and sustainability because we care for your business and its development.
Steps for selling your online business to unybrands
Every business has its story, and at unybrands, we tailor our acquisition approach keeping your business at the center of the process.
- As you contact us, our team evaluates your business, its valuation, growth potential, business projections, etc.
- Once we are sure that we’re the right fit for your business, we reach out to you with an offer. Also, we share a Letter of Intent – detailing the terms, price, and other details.
- As both parties agree to the terms, our team conducts due diligence to ensure all information is above board.
- We understand your business in and out with your help and carve out a comprehensive growth strategy for the future. This helps you ensure that your business is in the right hands.
- We then finalize the payment and transaction within the next four to six weeks. We provide options for payment models for your convenience.
- As we make the payment, we also start the transfer process of your assets to our platform.
Selling an online business can be a long drawn and laborious process. It’s critical that every step, including finding the right buyer, determining the business’ value, etc., is coupled with an intelligent strategy. We hope this article helps you prepare for selling your online business and make the best decisions at every step of the journey.
If you have any questions or wish to sell your business to unybrands, we’d love to connect with you.
1. How can I find a trustworthy broker?
An excellent strategy would be looking at the broker’s experience, especially in your area of business. Good brokers usually charge a decent amount (around 15% commissions on sale) but make the process easier.
2. Is it better to sell my online business privately?
If you are a good negotiator and can manage all aspects of selling your business, you can easily accomplish a private sale. But finding the right buyer depends on your network. The selling process can take a long time without a broker.
3. How do I find my business’ worth?
The valuation of your business depends on many factors, including sales, growth, and cash flows. Try using the process given above in the article.