Selling an online business is very different from making a retail sale, or even selling a brick-and-mortar business. The e-commerce industry has made significant strides over the course of the past few years, creating a unique buying and selling ecosystem for online businesses. While some principles of selling a traditional business apply, parties involved in selling online businesses must be aware of what makes a successful and saleable online business.
As an online business entrepreneur, you may be looking to sell your business for a number of reasons. You may be unable to scale and grow your operations because of a lack of professional expertise or resources. Whatever the case may be, it is always helpful to know what factors can ensure a smooth exit for you.
Prepare your business
While it is crucial to maintain comprehensive and orderly business operations to ensure that your enterprise lives up to its full potential, some factors require more scrutiny when you are seeking to sell a business online and make an exit. Here's a look at some of these factors and how you can best prepare to sell your internet business—
Understand what sells: The first step in preparing your business for sale is to get an estimate of what a buyer is looking for. You must understand whether there is a buyer for the type of model on which your business operates. Resellers may often find it more difficult to sell their business when compared to labels that have patented products.
Moreover, the period of time over which your business has been operational is also a factor considered by buyers. An enterprise that has accumulated a significant base of satisfied customers over a long period of time is more likely to sell and fetch a good value.
Ready financials: Well-kept and easily understandable financial information will help a buyer assess the profitability of your business. Buyers are interested in the revenue, profits, and margins of your business. These can be made readily available by keeping records that are clear, concise, and verifiable. Moreover, these numbers should indicate to the buyer that an investment in the business will be profitable and yield good returns if acquired.
Gather and present data about your business: Before you can step out to look for a buyer, ensure that you have all relevant data about your online business at hand. Information such as the traffic drawn by your website, conversion rates, and other data pertaining to customers should be collated before you sell a business online, even though you will present it to the buyer at a later stage in the acquisition process.
Once all the information about the business is collected, it needs to be presented in a simple, succinct manner. Sellers can create standard operating procedures (SOPs) that detail the operations of all aspects of the business. These documents provide a deep understanding of the business and help the buyer decide whether it is a worthwhile investment.
Methods to sell your business online
Once you have made all preliminary preparations to sell your online business, the next step is to figure out what methods you can use to sell it. Here are some options that you can explore—
Sell privately: Through this method, a seller can avoid investment in multiple resources and interact directly with interested buyers. You are not required to pay any brokerage either. The process of creating the listing, finding buyers, and negotiating the price fall squarely on your shoulders. This way, you have more control over how the sale is made.
Broker: By availing of a broker's services, the process of selling becomes easier for you. The broker seeks out potential buyers, carries out negotiations on your behalf, and tries to get you the best deal on time. This is a good option for those who have no prior experience in selling online businesses.
Competitor: Your rival business is likely to give you a good deal for your operations because their objective is to eliminate competition. However, take into consideration whether you wish to run another business in the same industry because the sale of your business would mean an exchange of sensitive information.
Aggregators: These players will buy your business directly and nurture it through professionals and a large repository of resources. Acquisitions made by online marketplace aggregators are extremely efficient and streamlined.
How to sell your internet business
Finally, after identifying the right buyer, it is time for you to get into the details of the process of selling your business. It is crucial that you decide on a minimum sale price below which you will not sell your business. Negotiations can be difficult to carry out, but sticking to a minimum salary price will help you stay on firm ground and successfully get the best value for your business.
The next step is to collect information about the business including data, numbers and documents. This must then be examined with the help of a professional or a broker. Then, for contract negotiation, it is imperative that you avail of the services of a lawyer to draw an agreement. Once these processes are completed, you should ensure a smooth transfer of ownership, as well as a seamless transition for your employees.
You can know more about how to sell online business by availing the services of experienced professionals like aggregators, brokers, and private equity firms. However, the basic tenets of selling a business continue to apply - conducting an accurate valuation, building a business that is both saleable and scalable, finding the right buyer, and finally, closing the deal in a smooth manner. In the hubbub of selling a business and making an exit, both buyers and sellers must ensure that customer satisfaction does not suffer.