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.
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.
A person who is contemplating selling their online business is likely thinking about what they can get out the deal, but if you choose to partner with an experienced team like those working at Website Closers, you’ll learn that it’s far better to think from the perspective of the person who might buy your company.
The practical steps involved in buying a profitable online business will give you a great eagle eye view of what a prospective buyer is looking for and some of the challenges they might experience in evaluating your online company or website.
Many people are familiar that starting their own online business and scaling it from the ground up is very difficult. In fact, this is one of the leading reasons that people turn to establish businesses to identify a turn-key model that works. From figuring out a niche to building an email list, to setting up a website, to driving traffic and creating other content, all of these can be challenging for a brand new business owner. Since you’ve already done most of the legwork for a person who may be contemplating buying your online business, they can effectively skip many of these phases.
What Buyers Look For
Buyers are looking for a turn-key opportunity that they can take over. Therefore, these buyers want to see that the company is making revenue and profits. The person who purchases the company might choose to let it run as it has been or try to make changes to increase profits. This means that new online business buyers are looking for companies that have a track record of sales and profits that are well established before they attempt to buy the business. This is clarified during the financial or due diligence phase of the sale. None of these online business buyers will rely on what you tell them alone. In fact, they’ll engage in their own research process to verify that you’ve given an accurate picture of what the company looks like.
Online business buyers are also looking for the systems, strategies and team members already in place to help the business run effectively. If the entire company is built on the success of you as the individual owner and a prospective buyer can sense this, they might be hesitant about stepping in due to concerns that they will not be able to continue the success. This means that it’s a good idea as a business owner thinking about selling your company in the future to remove yourself from the process as much as possible. This can show to prospective buyers that the success of the company is not built on you alone, which can be very important for helping an online business buyer to believe that they can step in and continue to run it successfully.
Online business buyers are also looking for companies that are growing, have traffic from a variety of different sources, have minimum revenues and meaningful growth that occurs from month to month, has marketing systems in place and has multiple streams of income. Knowing all of these things in advance can give you an opportunity to tweak and adjust your online business approach for maximum success.
As a website owner or someone who does business on Amazon FBA, you already know how much reputation matters.
One bad review online can haunt you for years, leading people who might otherwise have done business with you to decline the opportunity. This mentality about the importance of social proof and reputation is something you should keep in mind as you plan to work with a business broker, too.
The truth is that not all website brokers are created equal. Some use flashy ads to draw in business or focus on that one big sale they made last year. But is that enough for you to trust your enterprise and website to? Don’t you want to work with website brokers who have been in this industry for many years and have made a living with a good reputation on top of it, too?
The Right Website Brokers
A broker plays a big role in the sale of your company. It’s about so much more than pulling together the research for a valuation. Instead, a website broker takes a look at the big picture of your company and keeps this in mind as they prepare a strategy for you to sell.
Reputation matters more than ever when deciding to partner with a website broker. This person should be someone you trust with your company and the entire process of the sale.
At Website Closers, we like to think we are only successful if our clients are, too. That’s what we bring to the table every time that we set out to work with someone new. You can tell exactly how much we’ve worked with our past clients and what the process is like by looking at our reviews.
We often find that our clients are thrilled about our reputation because they know that we understand this process.
We are familiar with what it takes to get through the whole process of listing your company all the way through to the sale process when the new seller takes over the company. From due diligence through signing the final paperwork, there will be plenty of questions you have over the course of this process.
The reputation of who you choose to work with is crucial for you to have the least amount of stress in the sale.
When evaluating possible website brokers to work with, ask for testimonials and references. Most companies who have been involved in selling websites have plenty of successful sales and can likely point you to an entire page of positive feedback.
You also want to know the broker’s reputation in the individual industry- have they sold sites like yours before, and are they familiar with common concerns expressed by buyers in that industry? Do they know what it takes to list the site and to have qualified buyers prepared to step in and make the purchase?
All of these questions should be things that you think about when trying to decide who to work with. This person and team will be involved in your life from the moment you hire him or her, so your choice makes a difference. Select someone with the right reputation.
Due diligence is a crucial aspect of selling your online business. Whether you are the buyer for an online business and are contemplating backing up all of the materials that the prospective seller has already shared with you, or if you’re thinking of listing your own online business for sale, you need to familiar with the due diligence.
Due diligence is one of the later phases in selling an online business. This comes after the letter of intent has been agreed upon and signed. This then initiates the due diligence phase of the deal. This is an exclusive period in the business deal in which you are unable to offer your business for sale to any other buyers.
The purpose of due diligence is to verify any of the claims that you previously made about the business. This makes it all the more important to ensure that your financials are up to date and accurate before you even list your company for sale because all of this information will be thoroughly checked. You must be honest during this phase, such that due diligence confirms the prospective of a buyer who is already interested in purchasing your company.
If you have shared that you have made a certain amount of money, for example, due diligence is the phase of the business purchasing process in which that individual will look through your financial statements to verify that this matches up with what you have previously claimed.
At any time during the due diligence phase, you need to recognize that the overall value of the business or the original offer that a buyer submitted could be reduced greatly if the buyer notices problems with the company. For example, if a buyer digs into the financials and other details during the due diligence process, they might find that some of the inventory was stored for a long period of time, or that a relationship with a key supplier is holding the business together.
If there is the possibility for devaluations as a result of these problems, a buyer is well within their rights to factor in a lower price than what they originally offered or were willing to pay to adjust for the risk they have discovered during due diligence.
There are many different things that might be requested for a due diligence process and as the seller of your online business you should be prepared and have these organized well in advance.
These are likely materials you already gathered during your own business valuation, and include:
An online business has a different due diligence process than a brick and mortar company, which means that you must be prepared for the reconciliation of bank statements with your online business and the overall value of the traffic on your site. Consult with an experienced business broker to get more support.
You are probably leaving money on the table if you choose not to work with an experienced website broker, but many people are deterred by the fact that a website broker will take a fee in order to list your company for sale. However, this fee is well worth in the end if this person can guide you through the process and help you avoid many of the most common pitfalls associated with selling a website.
In fact, you could be leaving thousands of dollars on the table if you are not careful. If your site is already making a few thousand dollars per month, you’ll recognize that it could worth some money.
If you have already collected all of the basic information that might be necessary to sell your sites, such as monthly expenses, revenue, domain age, growth trends, the amount of time invested on the site, income sources, page views, and unique visitors, you are already looking forward to a big payday because you have come to the conclusion that you are ready to sell.
However, when attempting to sell your business website on your own, you set yourself up for potential mistakes. A website broker performs numerous tasks in the process of helping you value and list your company for sale. These include:
Website brokers are involved in the entirety of the sales process. A broker typically does their own due diligence prior to listing a website for sale in order to verify that it can and will be sold in the current market.
After both parties have reviewed the paperwork collected by the seller, the seller than gives the final instructions for the broker to sell the site. Then the business broker gathers this information that will used to market the site and generate a competition between buyers.
Every broker typically has their own unique method of selling a website. This means that they have access to marketing channels your typical person doesn’t have access to, such as subscriptions to business classified sites and established network of people they know may be interested in buying your particular business, investment firms and more.
Furthermore, a website broker will be familiar with every aspect of your business and how that translates to underlying revenue for the sale. This means that a website broker can get higher multiples than owner listings or auction sites.
This is because the business broker has a more in depth review into what it takes to sell these companies and has probably had passed tractions and success in similar industries or with similar sites. A business broker makes it easier for you to sell your business so you can remain focused on the transition of your company to the new owner.
Selling an Amazon business is likely to be much easier when you have hired the support of an experienced online business broker. Most people begin their search with the question; can I sell my Amazon business? The short answer to this question is; yes.
Even if you know that now is the right time to open to the possibility of selling your company, it’s the decisions you make from this point forward that can influence your ability to get maximum value on your business sale.
Is it Time to Sell Your Business?
Most people who have a successful third party selling business on Amazon will be eligible to sell that company and receive compensation after identification of the right seller. There are three primary types of Amazon FBA business organization and it is important to realize which one of these applies to you before you begin, in order to get the most out of the selling process when hiring an experienced online business broker. These three types include private label, re-seller and proprietary products.
If you have your own brand, but exclusive contracts with wholesalers to sell on Amazon, it might be much easier to sell this type of a business because you’ll have some leverage and this is more appealing to buyers.
You may be purchasing products wholesale and make a margin while selling retail on Amazon. This may also be referred to as a model known as retail arbitrage. This type of business can be very difficult to sell even if your profit amount is high. There are a number of reasons why this version of an FBA business is much harder to sell.
This includes that supply can be an issue, that it is highly volatile since there is no method to appropriately control the amount of competition, and because a buyer is only essentially getting access to your seller account and not reaping other benefits that would typically be pursued in this type of situation.
If you have created a popular product or a formula or you have made a popular product’s formula better and this is unique to you and your brand, this is a gold standard in terms of a sale because buyers are willing to pay a premium. Your business is more defensible over the long term because you are the only one who sells this specific item. You may be confused about which one of these models apply to you.
Tips for Selling an Amazon FBA Business
It is very convoluted to figure out the exact steps necessary to sell an Amazon FBA business, which is why so many people turn the services of an experienced online business broker to determine the most appropriate way to go forward. An online business broker will have extensive experience in this field and be thoroughly knowledgeable about the negotiation process and the identification of the right type of buyers to begin with.
Selling your online business is an exciting prospect but it is one that should always be approached with caution and extra consideration. An experienced business broker can help you successfully navigate the process of selling your business.
Website brokers and small business brokers are a crucial aspect of finding the right buyer and helping you to prepare for the sale well in advance. An e-commerce business broker should be thoroughly vetted before choosing to work with him or her. The right business brokerage for you will be one that keeps you informed over the duration of the process. An online business broker is a person who will work with you closely both before and during the sale, so it should be someone you’re comfortable with.
Reasons to Work with a Website Broker
Website brokers exist for the primary purpose of helping website owners to sell an online business. They may assist with selling an Amazon company, an e-commerce company, a tech company, a software company, or any other digital business.
A broker will provide access to an established network of buyers for the company and given that selling a business and website is a complex and time-consuming task, hiring the right online business brokers to assist in this process can free up your time and energy to be spent elsewhere.
Selling a business is also a highly emotional process and there’s a chance that you have developed tunnel vision and may be unable to understand the varying issues associated with the business valuation. Business brokers are neutral and can help you see how the facts are presented to the potential buyers.
A business broker, however, will mentor you through the process and will keep the sale of the business confidential through the use by qualifying buyers and using nondisclosure agreements.
Many website brokers are thoroughly experienced negotiators and can help you get the best deal on your terms. A good small business broker will take the time to explain his or her process to you and to provide you with all of the information you need to make a decision confidently.
Why Does it Matter That You Choose the Right Online Business Broker?
You need to feel very comfortable with the process of finding the right internet business brokers because you have spent a lot of time and energy building your business and you deserve to have someone who brings that level of care and attention to the table when it comes time to sell your company.
Sadly, not all small business brokers are legitimate and many of them do not have the appropriate experience or commitment in the field.
A lack of listings by website brokers, for example, could be an indication that they are not in high demand or used very often. Make sure that you complete a research process well in advance of choosing to work with a particular company.Online business brokers with a clear track record of valuable sales in the past are extremely helpful to you for answering your questions and protecting your interests in a sale. Reach out today to small business brokers who care about you and your company.