The dream of being an entrepreneur is a common one. By building a business from the ground up and into a thriving company that sees maximum profit, you can set yourself up to be financially secure later in life. When thinking about selling an eCommerce business, there are a lot of factors to keep in mind. After all, this is a business that you have poured your heart and soul into, so you need to take the time to consider the best way to get the most out of your effort and investment.
eCommerce is taking the online industry world by storm, and with the advancing technological capabilities of working online, it will eventually be one of the main ways that business will be conducted. However, you might be looking to cash in on the current demand, so follow these five tips if you plan on selling your eCommerce business.
1. Clean Up Your Website
Websites are valuable for a reason. It gives customers an avenue to obtain products or services online through an easy-to-use interface. When you sell your eCommerce business, the website and its domain go with it. This means that you need to have a user-friendly and valuable website that manages a large portion of the business’s operations. Think about spicing up the website or changing the theme and color settings. Remove pages that receive less traffic and provide an easy way for customers to get hold of the business.
Go through each part of the backend of the website and look for faults or errors. Declutter everything that is unnecessary and apply a clean-cut look that will make prospective buyers more interested. A website is a great way to manage passive income and with the right features in place, it makes the act of purchasing your items more enjoyable for the consumer.
2. Go Through a Marketplace
If you need some assistance to manage the sale of your eCommerce business, you can try selling through a marketplace where buyers are always looking out for profitable businesses to purchase. Most marketplaces have a small listing fee as well as charging commission when a sale has gone through. It’s a small price to pay to have the sale managed through a reputable marketplace system affiliated with other business buyers.
By going through a marketplace, you will have to provide a valuation figure for your eCommerce business. You will need to find the earnings multiple, calculate the annual and monthly recurring sales, and provide an inventory list of your supplies. The linked blog post discusses how value is calculated in eCommerce business sales by evaluating each one of these aspects and more.
3. Finalize Financials with Updated Figures
This is by far the biggest factor that will determine the successful sale of your eCommerce business. If your financials don’t show a clear profit margin with low operational costs, you may find it hard to secure a sale. The first part of this is to make sure that all of your financials have been captured correctly over the years, and that there is a positive number at the end. Managing a business’s financials is done easily nowadays with the many accounting software options available. All of these programs will have reports that you can generate to determine the financial feasibility of your eCommerce business.
Take up the services of a third-party accountant that can evaluate whether the information has been captured correctly. This will include your current expenses, outstanding debt, and tax obligations of the business. If you owe too much money to suppliers or have maintained a poor credit record throughout your business’s lifetime, the system will show this in every minuscule detail possible. You have to be financially viable for any buyer to take interest in the business.
4. More Data Means More Opportunity
Data is everything in the eCommerce world and just like your website, your customers will be handed over to the buyer once the sale is finalized. This allows them to retain existing customers and is a large part of calculating a business’s value. As a seller, it is your responsibility to ensure that all the information that you provide is accurate and up to date. This means going through all customer databases and removing duplicates, redundant accounts, and even identifying which customers have been lost over the years. This allows the new buyer to approach the lost client and try to recruit new business.
Your customers are likely also categorized by certain demographics so be sure to export all of the information into an Excel or CSV format that can be filtered accordingly. The new owner is likely to run promotions and specials, and by identifying different ages and genders, they can tailor their marketing accordingly.
5. Get Multiple Opinions From Experts
Selling an online business is much easier than the old brick-and-mortar types. You can sell to anyone around the world, so the process is much smoother. If this is your first sale, you will need to enlist the help of a few valuation experts that know how to sell businesses successfully. Don’t jump at the first offer that is put in front of you. If your business is valuable enough, you can sell it for far more than expected and a valuation expert can help you with this.
There may be factors that you are missing or haven’t identified that need to be corrected. For example, if you make less money in the fourth quarter of the year, a valuation expert will be able to tell you why this is happening and how you can correct it before finalizing the sale. These types of factors can be big concerns for eCommerce business buyers because it shows a trend in the business that needs improvement.
Selling any business is taxing both emotionally and physically but you can make a success out of it by following these five steps before you sell. Prospective eCommerce business buyers need to know that the business has been profitable for a few years and that the financials indicate more success is to come.