Deciding how to approach the process of selling your e-commerce business can be overwhelming or even confusing if you don’t have the assistance of a knowledgeable website broker to guide you through. Inventory is no doubt required to run your business and you have probably established clear systems and processes to help you stay on top of all of that inventory.
It is frequently the case that you would include a normal level of inventory in the purchase price of your company when you decide to sell your e-commerce business. The primary purpose of this is to make a good faith effort to allow the business to sustain current revenues already being generated by the company.
This means that everything over this normal amount that you include in the purchase price has to be bought by the buyer in addition to the underlying business valuation. There are several different factors that must be incorporated in your consideration of your inventory cost, including:
There are many different factors you can incorporate into the process of fine tuning and tweaking your business to prepare it for sale. The following factors can significantly enhance the value of your business beyond the inventory and current sales;
When thinking about selling your business, partnering with an established e-commerce sales firm can help you to accomplish many of your sales goals. A website broker should be familiar with the common tactics used to arrive at multiples, how to list your company online for sale, and how to vet potential buyers against who should make the short list for consideration. There are a lot of different factors that go into listing your company for sale, but you want the peace of mind and the confidence that your business broker is handling these processes as effectively as possible.
Are you thinking of selling your online business, whether it’s e-commerce or another website and want help through the process? A business broker could be just the person you need to turn to get assistance with selling your company. A business broker is a trained professional who assists people with selling and buying businesses. Often business brokers do not possess a license to operate as a broker.
More importantly, they should have extensive experience in evaluating and listing online businesses for sale and have an established network of prospective buyers who are already pre-qualified to express interest and request further information about your company. Some of the key aspects of the process handled by a business broker include estimating the value of the business, advertising it, and carrying out interviews with potential buyers. Much like when you work when you bought or sold a home, you probably worked with a real estate agent, it can be beneficial to have the expertise provided by a business broker when selling a business.
Brokers play a crucial role in the process of selling an online business because they provided advice, guidance and other resources that might be necessary to make a transaction happen. It is very common that there are snags, obstacles or delays in the process of selling a business even when it seemed like the sale was going to proceed without any problems. This is where a business broker truly shines because he or she will have experience with negotiations and some of the common pitfalls in the process. Business brokers often have years of experience and training in buying and selling various sized businesses and can, therefore, offer you expert guidance and recommendations when you encounter any challenges.
Brokers are also frequently well connected to established professionals, such as accountants, attorneys, and finance experts who might be necessary in the process of facilitating the sale. For a seller, a business broker can also put together the marketing package, evaluate the various financial information and other tools to determine an appropriate listing price for the business and put in all of the back end work to ensure that the business is properly marketed for sale.
Brokers can also provide useful advice about how to prepare business for sale if you are not quite ready to list it. All of these services are performed by the broker, meaning that the business owner can stay focused on what they do best; running their business and establishing the systems in process so that it can be effectively handed over to a new buyer.
Brokers can also serve as beneficial for buyers since a broker can present to them motivated opportunities and sellers that meet their particular passions, skill sets and financial objectives or goals. When hiring a broker, not everyone is created equal. In terms of picking a broker, you will want to interview several different people to better understand the process and past experience in your industry. You’ll also want to review their credentials and ask for references.
The background provided by your business broker can tell you a little bit more about the typical situations they have worked on in the past and this can help you make a decision about whether or not they are right for helping for putting your business up for sale. Since this person will be so closely involved in helping you list your company, you’ll want to be fully prepared by having a business broker you can trust.
Business brokers are not required to have licenses or specific accreditations. However, reading more about your prospective online business broker could be your first opportunity to decide whether or not to work with this person for the sale of your business. Most knowledgeable business brokers have been involved in this industry for some time and can point to numerous successful deals and overcome challenges as a way to give you further information about the process.
A business broker’s public reputation usually refers to what’s available online. Living in a digital age, we turn to reviews about companies to make important decisions about who to work with. The same is true when selecting an online business broker. A business broker can advise you about what to anticipate during the process and how the business valuation will occur.
This has important implications for how you move forward with your company and can help to put your mind at ease when selecting someone who will be so personally involved in helping you structure your company and list it for sale.
Pay close attention to the reviews and testimonials published online about your potential business broker firm. They can tell you a lot about the past experience that other people have had in working specifically with that company and can alert you to common red flags or bad experiences that other people dealt with. The best predictor of future behavior for an online business broker is past behavior and in fact, a business broker’s reputation should be one of the most important ones that you evaluate.
Ask anyone who might have previously worked with a business brokerage about their individual experience. Get on the phone if you can where there is a better chance that they’ll be upfront about what it was really like to work with the firm. Be aware that practically everyone in the online business broker industry will claim that they have the best negotiators, the most sophisticated selling strategies, and the most comprehensive process. Before you sign a listing agreement, however, you’ve got to do your own due diligence and figure out whether or not this is accurate. Asking for recommendations for past clients shouldn’t throw up any red flags at the business broker’s office. In fact, they should welcome it and easily point you in the right direction of past clients you can communicate with about the overall experiences.
One of the biggest disparities between different business brokerage firms is the emphasis and value they place on marketing your business. Some might simply place an advertisement on their website and call it a day, whereas, others will develop comprehensive marketing strategies. No matter which method your firm takes, you deserve to know this information upfront so that you can decide whether or not to work with them. Contact us today for a thorough review of how our online business brokers take your business seriously and get help throughout the whole process.
As a business owner, you might soon begin contemplating what it would look like to sell your business. Whether you have been in operations for a while or are relatively new to the market but feel like it’s time to move on, you would probably have your own solid reasons for wanting to sell your company. One of the most common questions presented to our knowledgeable business brokers is; does it matter when I choose to sell my company? Is now the right time to sell my business?
Common Reasons People Sell Their Businesses
Selling an online business gives you the opportunity to move on to other prospects. However, there are many different reasons why people approach the idea of selling their online business. Some of these include disputes, health, retirement, stress, burnout, relocation, trading up to a new opportunity or financial hardship. The best time to sell your business is when it is growing and profitable because this is the time when it will be most appealing to potential buyers.
How Do I Prove the Value of My Business?
In order to illustrate the value of your company, you must have accurate financial statements. Tax returns and income statements can help to illustrate the relative success of your business from a financial perspective. This shows a growth or a decline in each year and a consistent level of income. If a financial show recurring growth, this not only makes your company more appealing to buyers but makes your business worth more. If you have not shown all of your income in order to pay less in taxes, the business is worth less since the cash flow is lower. It might be a good idea if this is your situation to keep the business for another few years and then show all of your income.
Expenses can be added back to your bottom line, giving you a bigger cash flow and a better selling price. Onetime expenses, expenses that are not necessary for the operation of the business and personal expenses should all be evaluated carefully when trying to elevate the value of your company. Your online business broker like the professionals at Website Closers can help explain each of these to you and then assist you with putting these back on your cash flow statement. You must be able to prove add backs and having accurate financial books is one of the top priorities for someone thinking about buying a business.
What Does Inventory Have to Do with The Value of My Business?
Your inventory turnover can vary based on your type of business, but it is usually expected to be turned over in no longer than one year. Evaluations of businesses with big inventory that can’t regularly be turned over are a red flag to prospective buyers. Make sure that your inventory is manageable and require a large down payment when selling the company. Furthermore, what goes beyond inventory is your equipment. Ensure that all of the equipment in the business, if necessary, is in good working condition. If you have equipment, purchase agreements or vendor payments that have not been used for a long period of time, remove it.
Make sure that everything in your business stays as current as possible. Spending a little bit of time cleaning and getting things organized makes your business look especially inviting when choosing to sell your business to a new buyer. Discussing all of these concerns with an experienced and knowledgeable business broker can help you to articulate what is the most important aspect of listing your company for sale.
Deciding to work directly with a business broker for the purpose of selling your online company is an exciting proposition as it means you’re moving closer and closer to cashing in on a business that you have worked so hard to generate, tweak and build. However, it is equally important to make sure that you vet the person you are thinking about bringing in to your process so that you can verify that you have done everything possible to protect your interests and to set your business up to sell for maximum profit.
One of the most important questions you’ll need to consider early on in this process is how the broker typically works. Many people have the question, how long does it take an internet business to sell? But it’s important to realize that the amount of time it takes to sell a website depends on numerous factors, such as the complexity and the overall size of the deal, the existing business model for the company and the market the business is in. Asking your business broker upfront, such as those working directly with Website Closers, could give you an idea of the average time to sale for online businesses they list.
This is a relatively good indication of the existing buyer network they have and whether or not your business broker can successfully value businesses appropriately. The size of the business, of course, will have a significant impact on how quickly it takes to sell but typical sales times can be anywhere from 30 to 90 days.
There are two key questions that you must be prepared to ask your business broker before signing an agreement to work together.
Good brokers will have an established network of professionals. If they do not provide a service directly they should be able to recommend someone who can help you with your question or concern. One way that this might come up will have to do with legal assistance. Good brokers will have some experience in working with attorneys or drafting legal agreements and will understand some of the creative deal structuring and term negotiation issues that come up.
You should also be notified by your broker about the importance of getting independent legal advice to review all documents prior to the time they are signed. Any broker who argues that you do not need an attorney or a lawyer or says that you do not need to use asset purchase agreement should be avoided.
You’ll have to reveal some very important inner details about your company to go through the sale. This is what makes confidentiality of chief importance in the sales process. You don’t want customers, staff or competitors finding out about the potential sale of your business.
A professional business broker will hold confidentiality in the highest regard and will generate interest in your business only by using teaser information. Interested buyers will also have to be appropriately qualified before receiving any of these details, such as by illustrating that they already have the financial means to purchase the company. Finally, a broker should also require that any interested buyer sign a nondisclosure agreement before getting inside details about the company. This helps to vet the network of prospective and interested parties to ensure that you are getting the most from each action that you take in hiring a business broker.
Website Closers is proud to have established a legacy of working hard in this arena and ensuring that your interests are always protected.
Building your business to the point of a successful six or seven figures can be an exciting rush and form of exhilaration for an entrepreneur. Unfortunately, far too many people overlook the importance of creating an exit plan. In the rush of doing things on a day to day basis, it’s easy to overlook the importance of developing a comprehensive exit plan and strategy for passing things on to a new owner.
Be Prepared for a Possible Exit
Anyone who has encountered a family business might have experienced the sudden departure of a person in a business without a proper exit plan. Unconventional or unexpected exits can do significant damage to the business, especially if the person was intending to sell the company and in the sudden departure of a person leaving it was revealed that the right strategies and tools had not been put in place. It is always best to have a plan or things can quickly become very complicated for those continuing to operate inside the business or to grow the brand.
An exit plan outlines who will be responsible for some of the most important components of running the business on a day to day basis. If you are contemplating selling your business, then your exit plan might also include further details about what kind of person would be taking over the company, what employees might be transitioning into different roles to take on greater responsibilities, and the transitionary period in which you would be able to train the new party buying the business.
At What Point Do I Need to Develop an Exit Plan?
The truth is that as soon as you launch the business, you should create a comprehensive exit plan. Your exit plan can be adapted based on whether or not you have chosen to depart voluntarily, such as selling the company or retiring or involuntarily such as suffering due to a disability or business concerns being tied up in a divorce. All of these issues are serious and worthy of sharing with your business broker. If you have not already developed a comprehensive exit plan, now is the time to sit down and think about how the company would be different if you were no longer physically there to run it. This can also be an important exercise for identifying whether or not your company is in a position to be sold. This is because the success of the company might currently be contingent on your own abilities to protect and to serve on a daily basis. You might not realize how much you have become tied into the company and the key component of the strategies and systems until you remove yourself, for example, to go on vacation or to take a sabbatical from work.
If you do not have other team members, procedures, and tactics in place to ensure that the company continues on an upward trajectory, this could be catastrophic not just for your own business interests and financial future, but for your ability to paint a compelling picture when listing your company for sale with the help of a knowledgeable business brokers. Establishing an exit plan is one of the most important steps you can take to protect the brand and value you have worked so hard to build.
You probably know that one of the most popular activities online today is making and selling websites. This can be hard for some people to consider if they’ve put in a great deal of work in building their website and getting it to generate a steady revenue stream. This means everything from building it, learning from it, growing it, and eventually selling it requires being detached from the long term operation of the business.
From Owner to Seller of a Website
Many people who have established an online company do not consider themselves experts in listing websites. This is why you might choose to partner with someone like an experienced and knowledgeable business broker. There are business models that revolve around buying, selling and building sites.
And these each have unique approaches because you can create business models around each one. The site selling market is evolving tremendously, especially, because the market place has become more competitive and many people are turning to the help of business brokers to list and sell their site. In the past you might have been able to list your domain for sale on an auction website and while this is still a choice available to you, it really captures all of the necessary details to get the maximum revenue and profit from the sale of your site. In fact, the market has matured as more people are jumping into online business at the same time.
How Has the Market Changed in Recent Years?
Both sellers and buyers are becoming more knowledgeable and sophisticated, which has resulted in numerous impacts for the website selling market, including:
Deal structures have gotten better over the past several years for sellers since many of these sales come in all cash. Sellers choose to work with website brokers to get out of the business and make as much cash as possible. Partnering with a website broker can help to remove many of the fears and concerns around selling a website and ensure that as a seller you understand everything that is involved in listing your company for sale.
Taking shortcuts and not getting the support you need from knowledgeable brokers like those working at Website Closers could end up limiting your ability to recoup as much as possible in the sale of your business. You deserve to have a clear understanding of all the steps that are involved and just one of the many ways that a business broker can help you includes assisting with complex contract negotiations. Far too many details fall through in the negotiation stage because a business broker has not been hired. Schedule a consultation today with our business brokers working at Website Closers to learn more about buying and selling websites- we know we can help you get the best price when listing your company for sale.
It’s no surprise that many buyers like to include seller financing when purchasing a business. But what happens when a buyer opts to purchase a business, has a seller note, and is no longer available to make payments in the future? There could be consequences for a seller who defaults on a seller note. This can also be a much different and unfortunate experience in the event that a business seller is asking this question because it is likely that the person who is responsible for making payments on the business has now missed the last few that are owed.
Who Does Seller Financing Make Sense For?
Buyers love seller financing because a seller being willing to extend a note on the deal requires that buyer brings less cash to the closing table. Purchasing a business that is already bringing in income means that a business could be used to pay out the portion of its own acquisition price. Therefore, the buyer of the business can leverage a larger business with less money down.
Many buyers who use seller financing do so to keep the seller invested and involved in the future success of the business, giving the seller peace of mind that the company will likely be kept running as effectively as possible. A final reason why seller financing has become so popular is that many buyers see sellers who are willing to offer financing as an investment in the confident future success of the company.
Why Do Sellers Dislike Seller Financing?
As much as buyers find it appealing to use seller financing to purchase a business, many sellers hate offers that contain seller financing. Sellers don’t love owner financing because if a buyer defaults, enforcing the payments can be expensive and frustrating. For them, where they don’t know if the new owner will make bad business decisions that could affect the ability of a company to continue growing.
Since there is very little real collateral, this can prove problematic when a buyer does not take next steps to make their payments and it often does not make financial sense for the seller to use this.
How Can I Tell Whether I Can Trust the Buyer Not to Mess Up Seller Owned Financing?
After a seller evaluates the potential enforcement issues that are raised by seller owned financing, their thoughts will naturally move to the buyer, such as;
One of the biggest problems has to do with collateral because if an owner is selling their business, they are typically ready to move on to up their pastures and if someone begins to miss payments, the chances are that this is due to the business suffering in some way which could spell other troubles. If you are curious about how best to protect yourself in any form of financed sales, you should speak with an experienced business broker immediately.
Buyers today tend to fall in three main brackets when showing interest in purchasing a website. Selling your website could be something you are interested in if you have put in a lot of leg work to build up revenue of the company and are now looking to move into a new opportunity. Having a clear understanding of the different types of buyers on the market can make it easier for you to choose the right website broker to list your company with.
The first category of website buyers are private investors.
These could be partnerships, small teams, or individuals. These could also include buyers who are looking for extra income from an already established business to supplement their job. Individual buyers could also be looking for a way to make more money in general or to use the business to replace a job they already have.
For these buyers, financial performances are not always the most important metric considered. In fact, these businesses could be acquired based on personal interest and the buyer could be focused on the happy process of doing the work to improve the company that has already been established.
Private Equity Funds
The second category of online website buyers are private equity funds. These funds have been entering the online market consistently over the last decade and are becoming more and more sophisticated and involved in the process. These are generally created on the principal that they will raise money from several different private investors, pool it together, buy a business, and then run it to deliver a return to those investors. The funds will vary in the set up for this structure.
Financial performance is one of the most important factors considered for private investors contemplating purchasing your business. Many private equity funds also tend to specialize so it would be hard to find a fund that uses numerous sizes of businesses with completely different business models. Instead you might be able to find a niche fund that has experience in your area, interested in purchasing your company.
The third category of online website and business buyers are strategic buyers. They usually have an investment or an existing business in a complementary or similar niche and can look at acquisition of your online company as an opportunity to enhance their existing assets. Furthermore, these buyers are focused on the benefits of the economies of scale and the synergies in at least two businesses. It can be difficult to pin down a criteria used by a strategic buyer to decide whether or not to make an offer on your company.
Many of the reasons for a strategic buyer to make an offer are not always financial. They could be interested in advertising partners, your email list or the existing team rather than the underlying profitability of your company. This means that you must be prepared to list the company and market it effectively with these details in mind. Understanding your target market could mean speaking with an experienced business broker about how best to prepare your company for online sale.
Here at Website Closers, we have seen a significant increase in the number of Amazon FBA businesses going up for sale. The good news, however, for sellers is that there is an increasing number of buyers who recognize the potential with owning an Amazon FBA business.
Our History with Amazon
We have been extremely busy dealing with a huge growth and requests from Amazon business sellers who have built their company to a successful point and are now thinking about leaving it and passing it on to another owner. This trend is not just limited to Website Closers either. Plenty of people across the online business brokers space have found that Amazon FBA businesses have become so popular that many people are specifically seeking out purchasing this type of company. In previous years, any influx of sellers from one category or specific niche of businesses has actually been a problem that most people are exiting the marketplace because they see bad changes ahead. However, that’s unlikely the case when it comes to valuation with Amazon businesses. Many Amazon FBA businesses were established several years ago, which means that many of the sellers needed time to establish a firm and solid business and to leverage all of their data points and profit enhancements to get to the point where they are at now to be able to sell it.
These Amazon FBA businesses might have started out small but have become very popular and a source of a consistent stream of revenue, making it the ideal time to sell.
This is part of the reason why so many Amazon FBA businesses have come up for sale in the last three years alone. Another major reason why Amazon FBA businesses have cropped up on our site in such significant numbers has to do with the fact that many other e-commerce stores have now expanded to have Amazon component. Over a quarter of Amazon sellers also have an online store. While plenty of Amazon sellers will stay on that marketplace alone, others are branching out and generate their own traffic and value in niche websites. Another reason that Amazon is so popular is because the seller growth has been consistent.
The marketplace has grown so much that billions of items have been sold through the site. Sellers are becoming an increasingly important component of how Amazon does business because these sellers can capitalize on the fact that Amazon generates a significant amount of traffic and has earned the trust of people who purchase from the website on a regular basis.
This means that a new Amazon FBA seller can jump in to even a competitive niche and might still have the opportunity to be successful. It is important to remember that after you have optimized your business as much as possible, you might consider selling on your own. Scheduling a consultation with an experience website broker could be the first step in assisting you with listing your company for sale.