As an e-commerce seller, you have a responsibility to stay ahead of the curve and to be mindful of what could potentially be coming down the pipe as it relates to e-commerce. Staying on the cutting edge and continuing to develop and refine your e-commerce strategy could help you to accomplish your goals and position your company as effectively as possible, should you decide to sell it in the future.
It can be overwhelming to stay up to date about all of the constantly evolving consumer expectations, especially given that there are numerous trends to pay attention to, like the reasons for abandonment of carts, where people choose to shop, different actions that could be taken to qualify for free shipping, and many more.
Some of the most important trends for e-commerce in 2019 could assist you with tweaking your current tactics and strategies to get the most out of your online business sales. These include:
Competing with Amazon In 2019
Although Amazon is still the biggest e-commerce retailer out there, there are several different things you can do if you have your own niche site or intend to develop your own e-commerce strategy. These include:
All of these tips will help you with figuring the most effective way to stay competitive and fully leverage on Amazon and other e-commerce venues in 2019 and beyond. Considering all of your options will also be instrumental in helping you to get a fair payment for your company should you choose to list it for sale in the future.
Website Closers works with you to list your company and then follow the sale all the way through until the sale is complete following any negotiations. This can be one of the trickiest aspects of listing and selling your company, but having a broker to assist you with carrying the sale through is critical.
Have you just decided to sell your online business and are currently negotiating with website brokers to determine who is the right fit for you? There are many different ways that a website broker adds value to the underlying ability to sell the company but understanding that some of the challenges may come at the very end of this business deal helps to set you up for success because you are able to prepare for these potential obstacles in advance.
Buyers who are stepping in to think about purchasing your business want to know that you have a firm strong business model that not only generates plenty of traffic and revenue, but that it also has the potential to be repeated if you were to be removed from the process entirely. This requires establishing plenty of procedures and a solid team, such that with some minimal training after the business is transferred, the new owner is able to step in and be successful. This is not always as easy as you might expect.
If you are wondering how to transfer your Amazon FBA business in particular, having a website broker who can help you navigate this process will be extremely valuable. There are several different hoops you might have to jump through in transferring an Amazon FBA business, although it is definitely possible. If the buyer believes that you do not have established processes or a firm training schedule in mind, such that you can hand over the company, transferring this website will be the least of your problems.
You may also have physical products that need to be transferred to the new owner or those that would need to be sold or otherwise disposed of. You need to be prepared to document as much as possible, well in advance, such that when it is time to truly sell the company, you have a plan in place to help you accomplish these individual goals. The support of a knowledgeable business broker can help you to avoid many of the common pitfalls associated with the business selling process. If a buyer gets nervous that you don’t have enough material or ability to transfer the company effectively with appropriate training, this is where your business broker can help to explain everything you have already done or are planning to do to support this process.
What if a Buyer Backs Out?
There are many different stages in the buying process in which a prospective buyer might get nervous and attempt to back out. As a business owner, this is certainly not something you want to have to deal with but getting panicked yourself is not the right way to approach these challenges.
Instead rely on the expertise of your business broker. Your business broker has probably been in similar situations like this before and can help you navigate these challenges effectively, such that you do not have to worry about losing the sale entirely in most cases. Of course, this will require having a business broker who has served in roles like this many times before and who is familiar with helping you navigate some of the biggest challenges.
Your broker should be comfortable with explaining the business selling process to you at the outset of choosing to work together and will help explain to you how their role can be involved to approach obstacles as these obstacles emerge in the selling process. You should be kept informed at every stage of your business sale so that you know what to expect and can approach the planning process with success.
Structuring your asset purchase using a strategy known as an earn-out is a popular way to handle the deal, and one that your online business broker might recommend directly. The most common method of using an earn-out involves a structured deal with financing that is handled by the seller.
Earn-out Financing Basics
Typically, this financing unfolds over an extended period of time. The buyer has the responsibility to lay down a significant down payment on the business, and then the seller finances the remainder by allowing the buyer to make payments and pay-off the company over time. The seller financed money is nearly always interest-free, meaning that this is a big win for the buyer. In a sense, if you choose to go the route of using an earn-out with your online business sale.
This is like getting a 0% interest loan from the seller. As a seller, however, there may be additional reasons for you to offer earn-outs. As a seller, you should consider offering for an amount and charge interest over the period of the buyer making payments back. This is a good way to minimize your own risk in case the buyer were not to pay the earn-out, and you can earn money above the actual list price of your business and extend the period of time for which you received that money.
It is essential to have trust in the buyer and seller relationship in order to take the risk with financing using this earn-out strategy. In the event that the business buyer is someone who is just beginning or might not have the capabilities to maintain the company or bring it to the next level of success, an earn-out might not be recommended since your company and your finances are on the line.
In the event that the business fails due to the buyer’s lack of expertise or ability to maintain it, the seller is unlikely to receive the remainder of their finance money.
Sellers who are no longer actively involved in the day to day management of their business should also avoid using earn-out as a method of financing. This is because you must become involved in the business all over again, even if it is to collect the funds that the buyer owes you on a monthly basis. An attorney or an escrow service can be helpful as a third-party service for leverage with an earn-out financing.
Having an online business broker who understands these aspects of listing your company for sale and who can advise you about whether or not an earn-out makes sense for you with how to proceed, can ease some of your fears and raise your confidence about the overall process of listing your company for sale. The support of a business broker is instrumental in helping you to list your company following the receipt of a fair valuation and to have a vetted pool of buyers who are interested and prepared to buy your business.
The right suppliers can help to sell an Amazon business. Many people don’t think about their suppliers in the traditional business valuation sense, but connecting with the right online business broker can verify that you think of every aspect of your company, and how to most appropriately position it with potential buyers.
The supplier dynamic of any FBA business is essential. Selecting the right suppliers and providing information about this to your prospective buyer can increase your chances of selling your company sooner rather than later for a nice profit. There are three elements that buyers typically look at.
One is the time to sell your Amazon business. This includes trading terms, lead times, and operational requirement. First of all, differentiation and price of the product on Amazon are both important for verifying you have an edge over your competition. When you want to sell your Amazon business, you must be prepared to address concerns about maintaining uniqueness in an increasingly crowded market. Many FBA business try to position themselves simply by having a completely unique product, or having the cheapest price.
However, the buyer will be interested in ensuring this will transfer with the sale on the same terms. The next issue important to consider when looking for how to sell Amazon business tips is our lead times. You cannot make any money if you have no items in stock, and unfortunately some FBA sellers have already had the experience of successful operations being so powerful that they run out of inventory, and then it takes several months to get the stock back in.
Any Amazon FBA business buyer will want to ensure the controls are already in place with regard to shipping and lead time to ensure they don’t run into similar inventory challenges. You must be able to demonstrate this. The finalized used to consider when selling your Amazon business is operations. When selling your Amazon business, if you work with numerous suppliers, you easily have many different products and shipping considerations and point of contact.
Buyers often will ease in simplicity of the overall selling process, so you want to ensure that much of the work associated with networking with multiple different suppliers is outsourced effectively or is automated. This can add a significant amount of value to your bottom line at the time of a business sale. If you are looking for how to easily sell Amazon business models, you will want to speak with an online business broker at the outset of your decision to sell.
An Amazon online business broker will likely have a network of possible contacts who may be the right fit to purchase your business, and give you a great deal of peace of mind as the process unfolds. The support of the right online business broker can make things easy for you, so that you can move on to your next business venture and wrap up this company sooner rather than later, having all of the materials prepared well in advance will make it easier to sell your Amazon business.
Determining whether an online business broker is legitimate should be the first step you consider when determining whether or not you want to work with a broker in the first place. Online business brokers are used by businesses, websites, and eCommerce companies of all sizes in the process of offloading the business and selling it.
The decision to sell your business can be an emotional one, but it can also have important financial repercussions. Which is why it is so crucial to identify only those online business brokers who have extensive experience in selling companies to begin with. Many people might think it might be simple to start their own online business broker establishment, without having the necessary experience, expertise, or network to appropriately sell your company.
In order to avoid this situation, you must conduct research well in advance. Several different things can help you determine whether or not an online business broker is legitimate. Although it would be nice to assume that everyone who has set up shop online as an online business broker is truly out for the best reasons, there are always companies in various industries who pretend to be legitimate but truly are not. The first thing to look for with your online business broker is whether or not they have an about page. This is a section of the website where you can glean information about the management and team working for the company.
You might even be able to check out the LinkedIn profiles of the associated staff members and can see whether or not they have written articles or posted updates that are related to the online business broker space. The next thing to verify whether an online business broker is legitimate is to identify whether there is a company address or name, since many companies are online, it might not necessarily be easy to identify a physical location for the business, but you should be able to find traces of numerous people working for the company, and be able to verify this with LinkedIn profiles.
The next thing to consider in selecting a legitimate online business broker is to verify whether or not their claims can be backed up. You need to do some digging to find evidence of your own to figure out whether or not the claims that they make truly correlate with real estate.
If a broker claims to have sold many different types of businesses, a specific number of businesses, or millions of dollars worth of businesses, check out their recently sold page to get an idea of the size of those companies and the success of the sale. Furthermore, success in this arena should be backed up by a reasonable number of testimonials provided by previous clients.
This is a great place to start with your research process because it can clarify what other people have said and experienced with regards to working with the company directly. Once you have done your own due diligence, it is time to prepare your paperwork to get the valuation process done, and to carry out the next steps of putting your business up for sale. The selection of an online business broker as significant ramifications for the future of your company, so do not hesitate to get help from only those online business brokers who have been working in the field for many years.
Are you waiting for the right timing to sell your online business?
There’s no doubt that once you come to the mental decision that you want to sell your business, you want to do so as immediately as possible. However, timing and careful planning in advance can have a significant impact on the overall sale price and how you feel about handing things over.
Preparing your business for appropriate buyers, strategically positioning it as a powerful enterprise and observing market conditions can all contribute to the timing of when you opt to sell.
Consulting with an experienced online business broker is one of the best ways to figure out whether or not now is really the right time to sell. One of the first steps you need to take in order to sell your online business is to prepare in advance. It pays to prepare your business for sale well in advance of when you actually put it on the market, both in terms of the potential income and the reduction of stress.
What to Gather Before Talking to Website Closers Brokers
You can work at your own pace by gathering all of the necessary financial records and then have those documents prepared when it is a time for a prospective buyer to reach out to you. This all should occur before placing your first business for sale ad with the help of an online business broker.
You will want plenty of time to gather the appropriate document that all buyers expect to see, but also to take small steps that could improve your company’s overall position in the market, making it more appealing to buyers to begin with.
The second step in preparing your business for sale is in researching the market. You will need to do some research to figure out where exactly your business fits into the market. Pricing your business too high could mean that the sale process is drugged out more than is necessary. Or could even stop the business from selling at all.
Market fluctuation and other changes that can occur within your particular industry will help you figure out the best time to put your business on the market. One of the crucial aspects of listing an online business for sale is defining your business’ value. Try to look at your business with fresh eyes from the perspective of the buyer to figure out the weaknesses as well as the strengths.
Then you will want to take as much time as possible to promote the positive and work on improving the low points with an eye for enhancing your overall selling price. Buyers often want to purchase a business when it is experiencing a steady growth and is doing well overall.
If your records indicate that your sales are in decline, it is probably not the best time to list your online business for sale, since this could reduce your selling price dramatically. Another keep aspect of selling your online business is ensuring that it remains competitive. This is one area in which the insight of an online business broker is invaluable. The documentation should show your current placement in the market as well as your past result.
Furthermore, you will want to illustrate the possibility for future work. All of the legwork that you have done up to this point can significantly enhance your position in the marketplace and your opportunity to generate significant revenue on the sale. Buyers want to see a good set of financial records and know about the customer base and current employee as well as all of the mechanics they’ll be taking over when it is time for them to manage the business.
Having a clear exit strategy and working yourself out of being in the sole leadership position in the business can also go a long way towards establishing your company as a leader in the marketplace.
Understanding seller discretionary earnings is extremely important when you are listing a website or an e-commerce business for sale.
Here at Website Closers, we have extensive experience helping you to determine the most appropriate valuation methodology so that you can charge the maximum multiple and receive a high profit from selling your company. Many e-commerce business valuations will look at historical earnings of the business. This is known as the net profit of the company for a minimum of the previous 12 months. From that point, once the number is obtained, a multiplier is applied. Some calculations can put the multiplier as high as five to determine the company’s valuation.
Who Determines the Multiple?
At Website Closers, we sit down with you to explain how the valuation process works, as well as what you can anticipate when we help you to sell your company. We believe that you should be kept informed about proper valuation methodologies.
Some companies or online business brokers might only charge a multiple of between 1.5 and 3.5, minimizing the possible opportunity for a return. How your multiplier is determined is based on several different elements that buyers, sellers, and brokers will all agree are relevant.
A few of the most important factors to be aware of in advance before deciding to sell your business can help you to figure out what you can anticipate with the business valuation process.
Some of these factors include consistency, scalability, revenue growth in the business, and the amount of work required to operate that business. The more pre-work you have done in advanced to remove yourself from the company and to enable other people to stop in and manage it can be extremely helpful. The more favorable the factors that are presented, the higher the multiplier you will be able to achieve, and therefore the higher your valuation. In these circumstances, it pays to have the experience of a knowledgeable online business broker who has been working in the field for many different years.
There are so many different valuation factors that go into determining an e-commerce business. One of the most important of these is traffic because this is the heart of your online company. You wouldn’t be able to make any sales if you didn’t have consistent traffic.
Putting some work into developing your traffic sources in advance is very beneficial. Operations and other financial details can be helpful for illustrating the true value of the company, like supplier agreements, the underlying cost structure, product concentration, licenses and trademark, payroll, assets, liabilities, and future commitment.
Understanding how all of these different factors can contribute to the amount of money you charge when selling your business is extremely helpful and can give you a lot of peace of mind. Our online business brokers work hard from the moment you contact us to help explain to you what you can anticipate so that you can make an informed decision about what to do next.
Selling an online business will always be an emotional process when you’ve been the one behind the scenes making sure you set everything up to be profitable and successful.
But what happens if you list your company without doing the proper homework or finding the right online business broker? You might end up with offers that don’t match what you were expecting. The timing of when you list your business for sale and for what is really important, which is why a broker should be involved from the beginning.
Knowing How to Get the Most for Your Company
Practically every business owner has the same question of “what will my online business sell for?” but it is difficult to know the answer before you are able to put your business on the market, or at least until you have considered the valuation process with the help of an experienced professional.
The most widely used benchmark across the industry is the financial value and an appraiser or valuation expert typically uses three approaches to calculate an online business’s financial value. These include the following.
The Market Approach
This approach will use sales information from databases incorporating data from your company and actual business sales to identify and estimate of your business selling price. The seller’s discretionary earnings and the revenue are multiplied by the sales multiples within the database. A business valuation to prospective clients who may need help with the market approach can be obtained from an online business broker.
The Asset Approach
Looking at the total value of company assets is one way to approach what would happen in an orderly liquidation. However, this is especially problematic with online companies because an equipment appraiser must be used and many of the assets inside a digital business are exactly that — digital.
Many profitable businesses that have a great deal of equipment may have an asset value that is much lower than the value arrived at by the other two approaches and this is why this is often not used to calculate a valuation.
The Income Approach
This general approach to valuing a business’s potential sale price comes from looking at the income that the business generates and determining the present value of a future income stream. This is the seller’s discretionary earnings minus the amount that is paid to a manager. An accredited business appraiser who works independently may be able to complete a financial valuation for you. However, another critical component of selling an online business is the strategic value of the company. To a certain buyer, the value of your company may be higher or lower based on the capabilities or assets of the selling business.
As online business brokers, we work hard to ensure that the strategic value is presented to the ideal candidates for purchasing the company. Since strategic value can vary, you will want to work with an experienced online business broker who has many years in this field and can help you find the right buyer for you.
If you’ve already come to the conclusion that selling your online business is an activity you should only approach with the expert advice of an online business broker, you’ve already accomplished half the battle of successfully selling your company for the best possible multiplier and being able to move on to new and exciting ventures.
Hiring a business broker can make the transition out of your company that much easier and can put you in the best possible position to get as much money as possible during the sale.
Most sellers who want to skip a broker don’t realize all of the services that a broker can offer before and during the sale process to make things much smoother. A successful sale may hinge on selecting the right broker, so your initial research and phone call with a team you choose can set you up for the best possible situation.
What Are Business Brokers Best At?
Finding the Right Buyers
Business brokers represent you, the seller of the company, for the duration of the sales process. This process is typically streamlined because the online business broker has a strong network that allows them to tap into potential buyers for your business. This means you can eliminate the challenges associated with people who are not serious buyers and begin to look at a shortlist of people who are truly interested sooner rather than later, when compared with listing your business for sale yourself.
Business brokers also will negotiate the most appropriate deal for you. They will work to get the best possible price for your company as well as any potential stipulations that you would want to see in the contract. A broker can also play an important role in keeping the sale of your business confidential while still allowing interested parties to know that it is available.
The sale of your online company does not have to be announced publicly in order for an online business broker to find a verified buyer and you may be eligible to keep your company up and running during the sales period without concerning employees or customers about what it means that you’re selling. A broker can also evaluate the financial specifics associated with a particular buyer and other background details about that buyer.
The Right Information
Although you will receive vetted credentials about the buyer’s financial position, your online business broker may go one step beyond to help you determine whether or not this person is the right individual to help keep the reputation you have worked so hard to build, going on. Many business owners make a critical mistake of assuming that they can handle the sale of the business on their own. However, it’s not necessarily true that you’ll always save money simply by refusing the assistance of a business broker.
The commission that is paid out to an online business broker is there to help them find the best-qualified buyers to ensure that your business’s reputation remains strong after you have stepped away from the company.
Have you ever wondered what your e-commerce website is worth? Have you put all of your blood, sweat, and tears into growing the business but now are ready to turn it for a profit? Have you ever considered the type of changes that you might be able to make to your website, in order to increase its value?
If you own an e-commerce company, chances are that at least some point in time, you’ve contemplated selling your business or at least interested in learning how much the website might be worth.
What Goes into The Backend of Developing an E-Commerce Business?
An e-commerce owner will put a great deal of work into developing a website, increasing products, growing sales and generating quality search engine traffic. When it comes time to sell the website, it is a big mistake to assume that if you build it, they will come.
Website owners may have a very difficult time selling their e-commerce company if the website itself is not running as efficiently as it could be. It can be very difficult to increase the traffic to your e-commerce store. Having a solid pay-per-click strategy and good search engine optimization strategy in place, can help to generate traffic very quickly, which will also increase sales and profits.
Adding more structure and staff can also assist in terms of getting more sales. E-commerce websites such as many other businesses are sold on a multiple of the seller’s discretionary earnings. Here at Website Closers, we will sit down with you during the initial consultation to tell you what you might be able to expect from the SDE or cash flow multipliers.
Increasing Your Multiplier Pre-Sale
A website owner can easily increase their multiplier, first of all, by working with an experienced online business broker who knows the lay of the land and who can establish a compelling offer in the marketplace. Other steps that a business owner might take to increase their e-commerce SDE include:
Selling a website is quite different from selling a brick and mortar company. Since there are so few tangible assets that will give collateral for a bank loan, it is important that you do all of your homework in advance to be able to show that the purchase of the business is a solid choice for your prospective buyer.
Having an online business broker who can help connect you with the right online business buyer will make a big difference in your ability to sell your company quickly and effectively.