If you’re a business owner ready to sell your online store, it’s essential to know that selling your business requires careful planning and expert advice. A successful exit will typically require these steps:
Look at your business the way a buyer will.
You’re a savvy business owner who knows your business inside and out. But you can’t put the buyer of your online store in the same shoes as you. They won’t know everything about your company and its history, so it’s essential to step back and look at things from their perspective.
To help you with this, we’ll walk through some questions that buyers might ask themselves when considering the purchase of an online store. These will give us insight into where they’re coming from—and how to answer them effectively during due diligence or even while directly negotiating a sale price with them.
What is the business model of this company? What does it do, and how does it make money? Where does the value come from? Are there any barriers to entry for competitors, and what are those barriers? What kind of customers does this business serve—what types of people buy from you, and why do they keep coming back? How will changes in technology affect your business over time?
Understand how buyers value eCommerce businesses.
Here’s how to sell your online store for the highest price:
- Understand how buyers value eCommerce businesses. Four primary factors determine a company’s value: revenue, margins, growth, and operating costs. Understanding these factors will help you know what buyers consider most important when valuing your business.
- Understand the value of your customers. From an operational standpoint, knowing which customer segments bring in the most revenue for your business is vital because those customers may be more valuable than others when selling your company. You’ll also want to look at how many new customers are coming on board each month and whether they stay loyal once they’ve made their initial purchase. If not, it might be time for some changes!
- Understand the value of your suppliers. Which suppliers are the most valuable from a revenue and gross margin perspective? Why are you so good at reselling those products versus the other products in your online store? How can your suppliers’ relationships be improved to generate additional gross margin?
- Understand the value of your technology. Ownership over technology can be an important factor when selling an eCommerce site because many buyers prefer companies that they know well enough not only operate well but have built out themselves as opposed to relying on third-party solutions (such as Shopify).
Get the right advisors to help you sell.
Now that you clearly understand what it means to sell your online store, the next step is to find the right advisor. If you have decided to sell your company, then it’s vital that you see an advisor who understands both your business and its market. A solid advisor will also be honest, trustworthy, and knowledgeable about how the process works.
A good advisor can help you understand your options and the best way forward. A great advisor will also have connections with buyers looking for a company like yours.
Gather all the information a buyer needs.
You should have all the information a buyer needs to make an informed purchase. This includes:
- Financial information, including your income statements, balance sheets, and tax returns.
- Information about your customer base, including any analytics or data you may have collected through your store’s use of Google Analytics or other marketing software.
- Information about your staff, including job descriptions, start dates, and salary.
- Information about suppliers and vendors you work with regularly — especially if they provide critical services that help run the business (e.g., fulfillment).
Prepare to be flexible in negotiations.
Now that you’ve come to terms with the fact that your store needs a new owner, it’s time to put together a strategy for finding that new owner. The first step is to figure out what you want in a buyer. Once you know what you want and why it will be easier to try and locate a buyer.
Selling online stores is a challenging task. Most people don’t have experience selling online businesses, so many things could go wrong when selling an eCommerce business. If executed correctly, selling your online business is one of the most rewarding events for an entrepreneur.
Calculate an asking price for your online store business.
The first thing you need to do is calculate the value of your online store business. To do this, you’ll need to consider all aspects of your business, including:
- Your Net Income, Gross Margin, and current salary.
- Your inventory. How many products do you currently have in stock? What are they worth?
- Your customer base. How many customers do you have, and what are they worth?
- Your brand. What kind of reputation does your brand have among customers and the industry?
- Your website. What’s the value of the website itself (and any other web properties), how much traffic it gets, and how much revenue has it generated over time (or could generate if adequately optimized)? If possible, also consider whether there are other ways for potential buyers to monetize a site with high traffic, such as affiliate links and advertising revenues; some people may be willing to pay more for an opportunity like this than just having a site that only generates sales themselves
Develop a sales process and timeline for selling your business.
After you’ve set a price on your business and agreed to sell, it’s time to develop a sales process. Your sales process should include the following:
- How long do you want the sale to take.
- Who will be involved in negotiations. (For example, only you and your spouse, a business broker, and an attorney.)
- How the buyer will be selected (e.g., highest offer, the most cash at closing, the best long-term buyer for the employees, etc.).
Selling your online store can be manageable as long as you prepare well in advance.
There are plenty of reasons why you might be thinking about selling your online store. Maybe you’re ready for a fresh start, you’ve found a new opportunity that seems too good to pass up, or perhaps it is time to retire. Whatever the reason, it can be daunting to think about leaving one business and potentially starting another.
Here are a few
steps that will help make sure the process goes smoothly:
- Get organized and make sure everything is in order
- Find potential buyers who are interested in buying your site
- Be responsive when you do receive an inquiry
- Review what other businesses sold for recently so that you know what price range makes sense for yours
Selling your online store doesn’t have to be difficult if you prepare well in advance. If you’re looking into selling your business and want the highest possible price, this guide will help you get started on the right foot. Remember: it’s essential to look at your business from an outsider’s perspective and find people who can help guide you through selling it. With their help, you’ll be able to figure out how much has been paid for other, similar businesses, calculate your asking price, and develop a sales process that will attract interested buyers.