The trick to selling any business is to make it worthwhile to the buyer. Unlike brick and mortar businesses whose value rests on tangible assets, the value of e-commerce lies in the underlying systems.
You need efficient processes to convince buyers. Buyers know that they cannot expect to get customers when they don’t have a proven business model. Essentially, the model should illustrate how to get the customers, the availability of customers, the products, and the sales process. The uniqueness of online-based businesses makes them volatile. It also makes them fluid. Online stores can grow by 100 folds overnight. So, how do you sell your ecommerce business? Follow the steps below.
Set up the systems and processes
Buyers want a foolproof business transition model. If you are ‘the business,’ it is hard to buy you. People buy processes and assets. For e-commerce sites, processes and systems are more valuable that even the company’s inventory. A suave buyer will want a business that can run in your absence.
The most important processes for e-commerce are product acquisition (production or procurement), customer onboarding, ordering, order delivery, financial management, and customer service. Others include recruitment, IT and database management, bookkeeping, and such things. Ensure that these processes are intact. Businesses that have their processes intact fetch tidy sums in the market.
Another major issue is legal compliance. Online businesses must adhere to strict compliance. For example, accepting payments online requires strict compliance with privacy rules such as GDPR. Setting your store with the latest payment options is mandatory. To be safe, you should adopt a PayPal Payment Pro option in Magento if you are accepting funds from multiple sources. Such an option allows you to comply with data privacy and protection without much hustle. It will also reduce the risk of exposure to liabilities.
Decide to sell
It is hard to sell your baby. Unfortunately, most businesses are babies to their owners. The owners have been with the business from infancy to what it is today. That connection is strong, and it is hard to shake off.
Find a solid reason why you want to sell. If you don’t have a good reason, you will be tempted to back out of the sale process midway. It is also good to define what you want in the future. Do you want to sell the business to someone who will accelerate its growth? Do you want to sell it because you have a good offer? Whatever the reason, decide how you want to go about it.
You can sell the business to someone who will rip the soul out of the company because all he wants is your distribution network. Identify your target customer. A good customer profile description can help you write a convincing prospectus.
Do a valuation
Valuation must be thorough. It must include online assets such as websites, social media networks, SEO tools, inventory, soft skills, business processes, and many other ingredients that make the ecommerce business tick. If your business is making a profit, all you need is to check the acceptable multiplier to determine the value of the business. However, you have to adjust the value to match inventory levels and other assets appropriately. If the store is not making a profit, you may need to consult a professional to value your business.
Whatever level of business growth your company is, you need to know the exact value of your business. The trick to proper valuation is good records. Digitize your business early enough so that every company data is available for scrutiny. Big data management processes are quite resourceful. You can use it to map growth potential for your business. Such attractive projections can fortify your pricing case. Once you have done a valuation, set the price.
Find potential buyers
As said earlier, understanding the buyer profile is imperative. If you want to sell to investment banks, you need to know them. You need to know how they operate. You also need to know something about their terms and conditions. Business negotiations involve crunching the numbers. Everyone wants to have the best deal available in the market.
However, most buyers are cautious when approached by a seller. Knowing where to market your business is imperative. If you are not sure about this, consult an agent. The owner can sell businesses that have profits of less than $100,000. Above that value, you are better off with an agent. During the sales period, keep your business in order.
Do not put all your energies into selling. Do not forget to give your business quality time and resources. Manage the business as if you are going to stay in charge forever. If you have chosen public marketplaces such as Flippa, you must know how to write your prospectus correctly. Ensure that you have all the relevant numbers available. Sales, revenues, margins, expenses, profit, and such things are important. Also, be available for any queries.
Shortlist the bidders, negotiate, and conclude the business
It is always good to sell a business to someone you have things in common. You should shortlist bidders that represent the best value for your business. Bidders will generally quote lower than the asking price, use facts to persuade them to adjust their bids. Use website resources such as Payment Pro and SEO to negotiate. When it comes to signing, ensure that you have all the paperwork intact. Also, prepare or peruse through all the paperwork and agreements before appending your signature. Minimize potential liability where necessary.