How to Sell Your Business Online in 5 Steps
So, youbuilt a successful online business by taking the best Amazon FBA course or teaching yourself from the ground up! You climbed the mountain, ran the gauntlet, and succeeded where so many others (90% of all eCommerce businesses, in fact) fell short. Now, having achieved what you set out to do, you’re ready to sell.
First, congratulations are in order. But before you ride off into the sunset, you need a proper business exit strategy.
Knowing how to sell eCommerce businesses isn’t just about making as much money as possible. After all the work you put into building your brand as the business owner, it’s just as important to find the right buyer who will honor the legacy of your hard work and then elevate the brand to an even loftier status.
Want to discover how to sell your business online the right way? This guide will help you prepare.
Step #1: Fine-Tune the Site
Before you begin discussing numbers, you must first make your online business looks as presentable to buyers as possible.
Think about it like selling a house. Would you list a home with an unkempt yard, a worn and flaking coat of paint, and leaky plumbing?
Not if you wanted to attract competitive buyers and list it at a higher price.
Instead, you’d pay a little extra to increase your curb appeal and ensure that everything was in working order. That way, buyers wouldn’t feel as if they needed to invest even more to make the house livable.
The same goes for your website. You need to give it that “wow” factor.
Even if your sales numbers are great, your online business may still benefit from a facelift or a complete overhaul. Whether that involves a redesign, a UX adjustment, a sitewide SEO optimization, or some combination, your business will be more valuable when it looks amazing, is easy to navigate, and ranks highly.
Step #2: Broker Discussions Regarding Employee and Supplier Contracts
Over the years, you have probably established robust relationships and partnerships with both the people working for you and with you.
Along with those relationships, you may have contracts in place that provide you with deals or discounts crucial to your yearly profit margins and business success. And your employees likely play vital roles that contribute to the business's ability to operate.
If you want to sell the company, you need to first have open and honest conversations with these essential players to ensure that those contracts and relationships will transfer over to the new owner. Continuity is key.
Should your employees decide that they don’t want to work under a new regime, you’ll then need to prepare SOPs that make it easy for new management to train employees.
Step #3: Establish SOPs
Your business’s new owner won’t just be purchasing the title of your company. They’ll also need the keys to how your business operates and all the steps you have taken to make it a success.
A new owner will require guidelines that cover both the daily minutiae of the company as well as the overarching business tasks. Standard operating procedures (SOPs) can act as a road map that new ownership can follow. These may cover your policies on an array of issues, including:
- Sourcing products online
- Finding new niche products
- Restocking inventory
- Handling customer complaints
- Returns and refunds
- Processing orders
- Managing inventory
- Shipping and delivery
- Promotions and discounts
- Managing the website
- Payment processing
- Customer service
- Order tracking
- Tax compliance
Step #4: Prepare Your Financial, Customer, and Website Data
Both your financial and customer data will be key considerations in the online selling process. These numbers, including the probable capital gains tax on your business sale, will determine whether the business sells and for how much.
You should take the time to prepare and organize the following information:
- Previous tax returns
- Three financial statements (Income statement, cash flow statement, and balance sheet)
- Existing customer list
- Social media followers, broken down by platform
- Mailing list
Online businesses will also want to provide data on their website metrics, including:
- Organic traffic
- Conversion rates
- Customer lifetime value
- Average order value
- Customer acquisition costs
- Shopping car abandonment rate
- Return customer rate
- Bounce rate
- Net promoter score
Providing potential buyers with clear and accurate financial, customer base, and eCommerce website data demonstrates transparency and can help to make your site more appealing.
Step #5: Estimate a Sales Price
The valuation of your company must always be rooted in its financial performance. Even if you think it may be worth far more down the road, you will need data to back that estimate.
There are several formulas you can use to set an online sale price. These include:
- Earnings before interest, taxes, depreciation, and amortization (EBITDA) x Multiplier
- Average monthly net profit x multiplier
- Revenue - cost of goods sold (COGS) - (operating expenses + owner compensation)
Additionally, there may be several ecommerce valuation drivers that impact the listing price, such as:
- Age of the business
- Supplier relationships
- Intellectual property
- Patents and trademarks
- Website traffic
- Industry niche
- Customer base
- Operational channels
- Product differentiators
To ensure you get your money’s worth and remain competitive at the same time, you’ll want to gather this data and consider it carefully while valuing your business.
Sell Your Amazon Business to Forum Brands
You now know how to sell your eCommerce business. But there’s one more step you need to take before you can make your exit: identify interested prospective buyers.
At Forum Brands, we make that a no-brainer.
Our mission is to purchase budding eCommerce companies and transform them into global consumer brands. We honor your legacy by building on the foundations you worked so hard to establish.
We offer a hassle-free close process and fast and efficient payouts in 30 days or less. Best of all, we offer our support if you decide to embark on a new eCommerce venture.
If you’re a passionate entrepreneur making $2 million or more in annual revenue on Amazon with exceptional customer feedback and a high-potential product, Forum Brands wants to hear your story.
Sell your Amazon FBA today!
Small Business Trends. Ecommerce Business Failure Rate at 90% After 120 Days – How to Avoid It With Your Business. https://smallbiztrends.com/2019/07/why-ecommerce-fails.html
CFI. Three Financial Statements. https://corporatefinanceinstitute.com/resources/knowledge/accounting/three-financial-statements/
MicroCap. Valuation Multiples for Ecommerce Companies. https://microcap.co/valuation-multiples-for-ecommerce-companies/