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For Sale By Owner Online Businesses

Posted by Mark Grossman in Articles
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For Sale By Owner Online Businesses

 

 

 

 

It is in your best interest to be represented by professional business brokers, allowing them to perform a business valuation when you want to sell your internet business.

Usually, the small business you own represents your single largest asset. So, you should let a group of professionals, such as Website Closers, who have networks of people with experience in closing businesses handle the deal.

But what if you want to sell your business by yourself? Is online business for sale by owner doable?

Advantages of Selling an Online Business by Owner

The biggest advantage of selling an online business on your own is that you don’t have fees to pay. A lot of brokers will charge upfront and even grab a percentage of the selling price for listing with them. They will also get you to sign a long-term contract despite already having a sure prospective buyer. In other words, you can take home the cash after taxes and other expenses required to finalize the sale. This decision makes a lot of sense for small business owners.

Another advantage is its hands-on approach. If you’re closely involved with the sale, you can keep yourself updated on the developments and communicate directly with potential buyers.

Vetting and Communicating With Potential Buyers

It’s not just about finding someone interested in purchasing but someone capable of continuing what you’ve built, protecting your reputation, and supporting your employees.

First, assess whether the buyer has the financial capacity to close the deal. Most buyers will need financing, so don’t hesitate to ask about their loan plans and whether they’ve been pre-qualified.

Next, evaluate their experience and background. Do they have the necessary business, managerial, and industry expertise? Request a resume to confirm their qualifications.

Also, understand their intentions. Are they committed to keeping the business and staff long-term? If not, you may want to consider other buyers.

When communicating, use both phone and email. Phone calls help build rapport, while email is ideal for documenting details. Taking time to consider responses—whether by email or phone—ensures clarity and better decision-making.

Preparing Your Online Business for Sale

Get Your Business Appraised

Accurate valuation builds credibility and helps you set a fair asking price. Start by analyzing your financials, such as cash flow, annual revenue, and net profit, among others. Then, evaluate the company’s potential through its track record.

You can use different valuation approaches, such as asset-based or earnings multipliers. While online calculators can offer quick estimates, they can only go as far as giving you a ballpark number. On the other hand, consulting an expert provides a more thorough assessment. This ensures you’re well-prepared for negotiations and gives potential buyers confidence in your business’s value and future prospects.

Make Your Business Attractive to Buyers

Exit strategies are best done years prior to selling the business. After the valuation, you have the opportunity to increase the value of your company further.

After determining your business’s value, focus on making it more appealing to potential buyers. Strengthen your brand by ensuring your products or services are unique, backed by positive reviews, and protected by trademarks, if possible.

These are some of the ways you can make your company more enticing:

  • Present consistent growth and show how diverse revenue streams mitigate risk. 
  • Additional assets, like a monetized email list or active social media channels, can also boost appeal. 
  • Streamlined operations are a major selling point, as buyers favor businesses that require minimal day-to-day management.

Prepare Confidentiality Documents

Confidentiality should be honored between buyers and sellers entering an acquisition deal. This, however, can be challenging for the seller, because information leaks are bound to lower the business value. The best way to mitigate this huge risk is to have the buyer sign a confidentiality agreement.

When it comes to businesses for sale, non-disclosure agreements (NDA) for potential buyers should be signed before they gain access to any sensitive information. This legal document helps protect your business’s identity and details. 

Next, a Confidential Information Memorandum (CIM) should be developed, which provides enough information to interested buyers without revealing everything. It outlines key business details and should be prepared ahead of time. These steps safeguard your business’s privacy while allowing serious buyers to evaluate the opportunity.

Market Your Business for Sale

Business owners need to be selective about the strategies they employ when they market online businesses for sale by owner. That’s because they need to practice confidentiality from the moment they start until the takeover.

Start by listing on dedicated online marketplaces to attract buyers who want to find online business for sale by owner. Remember that fees may apply when doing so. 

LinkedIn, in particular, offers its Sales Navigator to help identify potential buyers within your niche. While you have the option to look at Facebook groups, they don’t offer much buyer quality.

Private networks can be effective, though they may take longer and come with higher personal stakes if deals go wrong.

Sign a Letter of Intent (LOI) with the Buyer

A Letter of Intent (LOI) outlines the buyer’s intent to purchase your business and establishes key terms of the sale. It typically includes details like the names of both parties, the nature of the purchase, and the exclusivity period for negotiations. 

It also assigns responsibility for costs and includes a withdrawal clause for the buyer. The LOI sets the stage for drafting the final agreement and conducting due diligence. While non-binding, it’s essential to have a lawyer review the LOI to ensure a solid foundation for moving forward with the sale.

Due Diligence

The due diligence process gives the potential buyer a chance to thoroughly examine your business before finalizing the sale. They’ll request various documents, such as income statements, tax returns, and legal agreements. 

This is also the time for you to request additional details from the buyer, including a personal financial statement or proof of funding if it’s a company or private equity firm. 

If real estate is part of the deal, expect a commercial appraisal and potentially an inspection, where the buyer might request repairs. Due diligence ensures transparency and builds trust between both parties.

Negotiate the Price

You don’t want your company to be undervalued, while the buyer doesn’t want you to overvalue it either. Approach the process calmly and without emotion.

Set a clear, realistic minimum offer before talks begin to avoid settling for less due to pressure or fear of missing out. Keep in mind that experienced buyers, such as high-net-worth individuals or firms, may use their negotiation skills to push for a lower price. 

Be firm on the value of your business while remaining flexible in discussions so you can secure a price that’s fair for you while maintaining a pleasant and positive relationship with the buyer.

Seal the Deal

After agreeing on a price, draft a sales agreement that clearly outlines key details such as the payment structure, included assets, and any contingencies. It’s wise to have both a lawyer and an accountant review the agreement to ensure all legal and tax considerations are addressed. It’s best to manage the transaction through an escrow service to protect both parties. It enables a smooth transfer of ownership, safeguarding the financial aspects of the deal.

Post-Exit Period

After selling your business, your role typically extends into a post-exit transition period, outlined in the sales agreement. This could last from a few months to a year, during which you’ll provide support to the new owner. This includes offering thorough documentation, training, and guidance to ensure they understand the operations. Additionally, transferring knowledge about key relationships and processes helps smooth the transition. By staying available for consultation, you help solidify the success of the sale and foster a positive handover, benefiting both the buyer and the business.

Platforms and Marketplaces for FSBO Online Businesses

  • WebsiteClosers specializes in digital businesses, such as marketing agencies, Amazon FBA operations, SaaS platforms, and ecommerce ventures. The company helps businesses, big and small, and has a track record of closing deals ranging from $1M to over $1B.
     
  • Openfair is an automation-driven platform designed to transform the M&A process with AI integration. It tackles inefficiencies in looking for, acquiring, and selling online businesses with a particular focus on exit strategies for baby boomers who plan to move on from their venture.
     
  • Latona’s operates as a boutique M&A brokerage, focusing on profitable online businesses for sale like websites, e-commerce businesses (including Amazon FBA and Shopify), membership sites, lead generation businesses, SaaS solutions, and domain portfolios. Initially starting as a domain name broker, Latona’s transitioned to web-based companies in 2008.
     
  • BizBroker24 specializes in the sale of websites and established online businesses valued from $150,000 to $20 million. As a registered broker-dealer, the firm supports buyers through every stage of the acquisition and capital-raising process, offering educational resources on financing, due diligence, business valuation, market trends, and more. For sellers, BizBroker24 provides valuation consulting, develops marketing strategies to attract qualified buyers, and assists with negotiating prices and terms.
     
  • Flippa operates as a global marketplace for purchasing and selling online businesses and digital assets. Flippa provides all-inclusive due diligence services and bridges users with third-party brokers and financing options.

Creating an Effective Listing

  • Buyers need to quickly see financial details that signal a solid investment opportunity. Write an engaging headline that showcases this as it’s the first element potential buyers encounter and determines whether they’ll explore further.
     
  • If you opt to list your business yourself, ensure you’re easily reachable. Potential buyers may be lost if they face difficulties contacting you or if responses are delayed.
     
  • On platforms like BizBuySell, you can categorize your business under both a “Primary Industry” and a “Secondary Industry” to increase visibility.
     
  • Be thorough in your description, highlighting the business’s unique aspects, strengths, and growth potential.
     
  • Meticulously proofread your listing to correct any spelling or grammar mistakes and ensure all details are accurate.

Legal Considerations and Closing the Deal

Once you’ve secured a buyer and agreed on a price, the next step is handling the legal and tax aspects of the sale.

Legal Compliance

A major risk of a takeover is that the new owner may introduce changes to your products, potentially leading to legal disputes. If you’re no longer involved in the business, any litigation shouldn’t affect you if you have all legal documents against future liabilities prepared by a professional.

For deals involving multiple payments or complex asset transfers, you’ll need a solid agreement that covers important aspects such as asset control, payment arrangements, and protections if payments stop or the business falters. This ensures you’re fully safeguarded after the sale.

Tax Implications After the Sale

Engaging a CPA is needed, especially if your business structure is complex or you’re selling to an international buyer. A professional accountant will help you navigate the tax implications of your deal, particularly if your agreement involves receiving payments over time. 

Large lump-sum payments come with specific tax obligations. Through the help of an expert, you can file tax returns and plan your next financial steps without issues.

Common Challenges and How to Overcome Them

Not Knowing When to Prepare for the Sale

Selling a business can take longer than expected, so start preparing as early as possible. If your business isn’t in top condition, you may struggle to attract serious buyers.

Are you selling for retirement? Plan your exit strategy well in advance. Avoid letting your business lose momentum while you think about your future plans.

A business owner who’s moving on from their venture should learn to detach themselves from their company to ensure its survival without your involvement. Strengthen your team, keep financial records up to date, organize important documents, and streamline operations to show that the business can succeed under new ownership.

Buyers can spot when a business has been rushed to market, so early preparation not only makes the sale process smoother but also increases your business’s appeal. Even if you don’t end up selling, you’ll benefit from having your business in excellent shape.

Overvaluation

Overvaluation is a common challenge when selling a business. After investing a huge amount of time and effort into establishing them, many owners struggle to view their businesses objectively and may overestimate their worth.

Setting an unrealistic price can deter potential buyers, causing the business to sit on the market longer than expected. As a result, you may eventually be forced to lower the price, which can hurt your negotiating position and make the business less appealing to serious buyers.

Accurately valuing your business from the start is crucial to avoid this pitfall and attract the right buyers from the outset.

Finding the Best Buyer

Finding the right buyer can be one of the most challenging aspects of selling a business. You may worry that the perfect match will never come along, especially when it comes to entrusting someone else with the future of what you’ve built. It’s important to have a clear idea of the type of buyer that would be best suited for your business, both from a personal perspective and in terms of guiding its future success. The right buyer should align with your vision and be capable of taking the business forward on a steady path.

Need Help? Turn to The Experts At Website Closers

We’ve closed far more businesses than most brokerages, so you want us in your corner when issues arise during the due diligence and lending process.

Remember, issues always arise, and not having experienced professionals present can either cost you the deal or significantly decrease the cash you receive after the deal. 

We’re here to help you maximize your cash at closing and market your business to a larger group of buyers at a higher price than what you were expecting. What that means is that our commission will likely be paid by the difference rather than straight out of your pocket.

If you’re a buyer, we can also help you match with established businesses that have excellent earning potential.

800-251-1559