Making a move to sell your ecommerce business is a big decision. While selling your business can be challenging at times, the process is often easier than you may think. We’ve put together some tips to guide you through it.
Why Sell Your Ecommerce Business?
There are a number of reasons why a business owner may wish to sell their company. One common reason is to locate better opportunities elsewhere. Running a business takes a lot of attention, and when there are better things to focus on, selling may be the right choice for you.
A Note on Negotiations
Negotiations are a big part of selling your business and a big reason why many business owners decide to hire a broker. If you’re handling this process alone, you just have to be prepared for some back-and-forth negotiations, this includes narrowing down the selling price. If you’ve ever bought or sold a home, then you probably know what it’s like – offer, counteroffer, another offer, etc. until the terms of the sale are hammered out. If this sounds too tedious to you, a broker is a good idea.
Once both buyer and seller agree to the terms of the sale, you’ll both sign a letter of intent, which details the terms of the agreement before closing the deal.
Be Aware of Potential Outcomes
Sometimes, selling an ecommerce business can be fairly simple, while other times it can get complicated. It just depends on the specific situation. That’s why it’s important to maintain realistic expectations and be aware that just because you put your business on the market, doesn’t mean it’ll sell quickly and easily. Just stay positive and remember the value your business holds throughout the entire process. Don’t get discouraged if the first person who shows interest doesn’t buy the business immediately.
Tips on Selling Your Ecommerce Business
Selling your business doesn’t have to be overwhelming; with some preparation and a few tips, it can be a positive experience.
1. Ensure Your Site is Ready
Selling a website is a little like selling a house. Your prospective customers will visit your site to see how it looks and functions. This means it’s vital to keep your site up to date and running smoothly while you try to complete the sale. Your site should be simple; potential buyers will want something that’s easy to make changes to but doesn’t require too much work on their end.
2. Organize Your Finances
Make sure your company’s finances are in order before selling. Many online retailers opt to do their own finances, either through a program like Quickbooks or on a spreadsheet. However, for the purpose of selling your business, it’s recommended that you hire a third-party accountant or bookkeeper to ensure your finances are all in order. The most common financial information requested by prospective buyers includes:
- Tax Returns
- Balance Sheet
- Income Statements
- Cash Flow Statements
3. Update Your Inventory
Ordering a considerable amount of inventory when you’re attempting to sell your online business is counterproductive, so it’s natural for products to go out of stock during the process. However, pages and pages of out-of-stock products can often turn away both customers and potential buyers for your business. If you find that many of your items are going out of stock, make sure you condense your product pages and categories accordingly. For products that are in stock, consider updating your descriptions.
4. Organize Customer Data
Take some time and go through your existing customer data (physical addresses, email addresses, purchase histories, website cookies, etc.). You’ll need to remove duplicate information and get rid of anything that’s no longer useful. Your customer data can be valuable to the person who buys your business, as they may wish to begin running sales and other promotions immediately.
5. Keep Up With Your Business
Selling your ecommerce business can take a bit of time, so it’s important that you don’t neglect operations in the meantime. The sales completed while you still own your business not only help financially but also influence your site metrics. Potential buyers don’t want to see a drop in sales after the business is listed; instead, try to keep sales steady and revenue coming in.
6. Determine Your Site’s Value
The best way to determine your site’s worth is by contacting a professional. Getting your site appraised can help you determine a ballpark listing value, and that report will lend credibility to your asking price. The main factors that’ll contribute to your site’s value include:
- Age of your business
- Customer Service
- Fulfillment/Supplier Relationships
7. Find A Broker (if you want one)
Deciding whether to sell your business on your own or hire a broker is a personal choice, and there are pros and cons for each option.
Hiring a broker is often more expensive than completing the sale yourself, with commissions to pay out of your sales price. Additionally, unless you know the broker well, you don’t know the quality of his or her work. Like any other professional, brokers are unique and their work ethics can vary greatly, so make sure you get someone who’s highly recommended.
On the other hand, brokers can walk you through the process of selling your business, making them especially helpful for first-time sales. Brokers also often have a network of buyers whom they can promote your business to, increasing the likelihood of a sale and decreasing the time it would take selling on your own.
8. Find Your (Qualified) Buyers
When selling an online business, the location of your buyer isn’t really important. They could be from anywhere, and you may receive a number of different offers. This means it’s important to properly qualify your prospective buyers. This is the process of finding the right buyer for your business – the one who will pay the highest price with the best terms, and is the best fit for the business. While the financial aspect is important, so is turning your business over to someone who will understand it and treat it well. Oftentimes, the terms become more significant than the offers you receive. Narrow down your list of offers to only those who should truly be taken into consideration. Brokers are often able to assist you here.
9. Complete the Sale
Once you feel prepared to accept an offer from a potential buyer, it’s time to hire a lawyer. They’ll draft up the necessary paperwork to complete the sale. This is an extremely complicated process to tackle on your own. With a lawyer, however, most of the process is taken care of for you, and signatures can be completed online to close the sale.
10. Transition Process
Depending on your sales agreement and contract, you may be obligated to assist the new business owner through a transition period. Your involvement during this time is entirely dependent on the agreement with the new owner. Do your best to ensure a smooth transition, as this builds your professional reputation, which may come in handy in the future.
The ecommerce industry is thriving. There are thousands of people who are looking to get into it and buying an existing business rather than starting one up is appealing to them. Selling your ecommerce business can be lucrative for you and good business for your buyer. By keeping your site up to date, following a few tips, and hiring professionals to help, selling your ecommerce business can be a smooth and simple process that allows you to get on with the next chapter of your life.