Website for Sale by Owner? Not a Good Idea

We’ve all seen the signs in front of homes for sale: a FSBO listing, or property for sale by owner. While owners believe it will be more cost-effective to sell their home on their own, they often find that operating with an experienced real estate agent provides numerous advantages that include their market knowledge, negotiation skills, and ability to tap into a vast network of industry professionals.

Still, for-sale-by-owner websites are growing, and that includes owners of eCommerce companies interested in selling their business on their own.

For a whole host of reasons, that can be at best a risky gambit and can cost the owner money in the long run.

Let’s explore the many reasons why a website for sale by owner deal is not a good idea.

Mistake 1: Underestimating Website Value

eCommerce business owners would be well advised not to try selling their business on their own, regardless of how profitable their operations are. There’s a huge gulf between selling popular products such as designer shoes or custom apparel, and finding the right buyer for your business, and at the right price.

Any owner of an eCommerce site would be wise to acquire the services of a professional business broker like the ones at Website Closer. One of the most important contributions a broker can make to the sale of your eCommerce company is ensuring the business gets the right valuation, which includes setting the right price for it.

A lot of business owners don’t know how to value their website before selling it, and end up underestimating their website’s value.

That could severely limit how much you get for the business you worked so hard to build, while a broker will use proven methodology to ensure your company has a fair and competitive price in today’s market.

Mistake 2: Ignoring the Importance of Documentation

Another mistake that sellers make when attempting a For Sale by Owner process for their eCommerce site is ignoring the importance of documentation. A lot of sellers are not aware of the essential documents needed to make the sale a reality.

Every business sale is unique, and each one requires different types of documents for the seller to review. How should sellers decide which ones apply to their business and sale, and how best should they prepare, organize, and present them to potential buyers?

This is another valuable service provided by a business broker, who can help the seller put their most important financial documents in order and avoid the mistake of leaving out documents that prospective buyers will want to review. If you get a tentative offer and you haven’t prepared certain documents that all buyers want to scrutinize, those buyers might not wait for you to get your paperwork in order.

Mistake 3: Skipping Professional Evaluation

The sale of every home should start with a professional evaluation. A real estate agent can tell you what should be fixed up or improved first, based on their knowledge of what buyers are looking for and what they avoid when it comes to buying a house. The real estate agent’s insights and market knowledge can help the homeowner maximize the value of their property once they’re ready to sell.

The same is true when it comes to selling an eCommerce business. Consulting first with a professional business broker enables the seller to take advantage of the benefits of a professional website evaluation.

Your business broker can quickly zero in on ways to maximize the company’s strengths while making much-needed improvements that will increase the value of the business. Skipping a professional evaluation can be a costly mistake, as many home sellers have discovered.

Mistake 4: Not Researching the Market

Not understanding market trends for an online business for sale can be another costly mistake.

Think about it in terms of selling a home. If you attempt to do a For Sale by Owner process, do you know what the current market conditions are in your local housing market? Is it a buyer’s market? Are there too many homes for sale, and you’ve got stiff competition? Are sellers being forced to cut their prices to remain competitive?

If market conditions are favorable toward buyers, keep in mind that purchasing a home is perhaps our biggest investment. Researching the market in advance is crucial to ensure you’re selling at the right time and for the right price.

The same is true for selling an eCommerce company. For the investor buyers, acquiring a business will be one of the biggest investments they make in their lifetime. As the seller, you need to research the market as vigorously as the home seller would and be certain that conditions are right for selling your business at the right price. That’s why it’s vitally important to do business with a company that is reputable, trusted, and experienced in selling online businesses.

Mistake 5: Poor Marketing Strategies

Outside of saying “Home for sale, by owner,” home sellers may not understand how to develop a smart marketing strategy for their property. That’s another reason why homeowners turn to experienced real estate agents who understand the right marketing strategies and where buyers are looking to learn about new listings.

This same logic applies to the sale of eCommerce companies. To get you top dollar for your business, your broker can review effective marketing techniques for your website sale.

Poor marketing strategies can leave your business struggling to find qualified buyers, and instead leave you overloaded with less serious buyers simply out to kick the tires, or competitors hoping to learn more about your business to find ways to undercut your company.

At Website Closers, we have an inventory database of businesses for sale that allows buyers to sort them by price, industry, location, and other key factors. Our database of online businesses for sale is carefully reviewed daily by qualified buyers, and we also know how to effectively market your business online to cast the widest possible net of buyers.

Mistake 6: Lack of Transparency

The lack of transparency on the part of a seller can also hurt a business website sale. There can be several negative consequences when there is a lack of transparency on the parent of the seller, including:

• Loss of trust from buyers who may feel misled or cheated
• Disputes resulting from incomplete or inaccurate information that can complicate the sale process and potentially lead to litigation. 
• Valuation challenges if buyers can’t accurately assess the value of the business
• Damage to the brand’s reputation due to a lack of transparency 
• Legal disputes from failure to disclose important information, which can be costly and time-consuming. 

That’s why transparency is essential for a successful business sale, since it builds trust with both sides. Your business broker can ensure this kind of transparency throughout the sales process. That’s why full disclosure matters when selling a website.

Mistake 7: Setting Unrealistic Expectations

Home sellers who want to sell on their own often begin the sale with unrealistic expectations that can include a price well above market value and an unrealistic timeline for how quickly it will sell.

The same challenges can apply to sellers of eCommerce companies, who may approach the sale with an overly lofty expectation for the sales price, and a far-too-quick expectation for how quickly it can be sold.

Your business broker can help you prepare your business for a sale. This is a very important step before making the sale official. There are essential steps that must be taken to prepare your business for a sale. Practical steps you should take to value your business include:

• Gathering financial statements (income, balance sheets, and cash flow statements for the past few years)
• Choose a Valuation Method that best fits your business type
• Consider hiring a business broker to ensure an accurate and objective valuation. 
• Use Valuation Tools to help simplify the valuation process

Your broker can also work with you on business optimization. Your broker can help you during all stages of the sale, and help solve the final due diligence issues. 

Your broker can also explain the importance of a realistic timelines for selling a website without a broker.

Mistake 8: Failing to Consider Security Risks

A serious mistake is failing to consider security risks if you attempt to sell your eCommerce site without a broker. Any potential business sale will attract scam artists who see opportunity in your listing, so it’s important to know how to avoid scams when selling a website.

When selling a business, it’s crucial to be aware of common scams and take proactive steps to protect yourself.  Be careful of:

• Phishing scams that include unsolicited messages that you should not click on. 
• Scammers posing as vendors or trusted sources via email, asking for sensitive information or money.
• Ransomware attacks by cybercriminals attempting to encrypt your data and demand payment for its release.
• Scammers impersonating top decision-makers at your company
• Scammers pretending to be from government agencies requesting sensitive information about your business.

Talk to your broker about ways to stay informed and the precautions you need to take to protect your business from scams.

Mistake 9: Choosing the Wrong Platform

eCommerce business owners eager to sell may not know the best platforms for finding buyers. While they can read the reviews of popular for-sale-by-owner websites, there’s no guarantee that luck will be with you by doing the same.

As many for-sale-by-owner participants have discovered, these sites are not always the best place to find serious buyers.

The internet has morphed in recent years and developed into a system that drives business and makes people money. That’s why, when it’s time for a business owner to sell their online business, it’s important to know the available options. Each prospective seller should be studying the process as best they can by researching online.

The DIY process to sell websites online might seem like an advantageous way to go – after all, the business owner is in complete control.

Although this might seem like a viable option, it really isn’t. When a business owner is ready to sell a website online, the most efficient and productive approach is to employ skilled brokers operating within the eCommerce industry. The entrepreneur should seek out the very best the industry has to offer.

Through dedicated research, they can discover brokers for eCommerce businesses who have been in the industry for decades and have hundreds of millions of dollars in successful sales under their belt, and who offer the business owner a guarantee that they won’t take a commission until their site has been sold.

These brokers also maintain websites that are viewed by millions of prospective buyers across the globe, looking for opportunities to acquire a profitable business in a top industry that they can scale. Website Closers has a website with a database of online businesses for sale, which qualified buyers review daily.

That’s what sellers need, not a for-sale-by-owner platform that can attract as many charlatans as honest investors.

Mistake 10: Neglecting Post-Sale Responsibilities

There are plenty of post-sale responsibilities that a seller will need to confront. Once the buyer and seller have agreed on a price and the terms of the sale, they still need to go through the due diligence process and then the transition. Anyone who puts their business up for sale on a for sale by owner website while expecting a quick progress is likely to be sadly disappointed.

This is a complex process that works more like this: Once you find a business broker you’re comfortable with, settle in for what can sometimes be a long process. There are a lot of I’s to dot and T’s to cross in the sales process, so it helps to know the stages of working with a business broker.

The first step in working with a business broker is their initial consultation. This is your opportunity to present your business to the broker, the reasons why you want to sell it, and what your expectations are. It’s a good sign if the broker asks you a lot of in-depth questions about your business, indicating a knowledge of the niche you operate in, and if the broker offers insights about previous businesses they have sold, which are similar to yours in size, industry, and business model.

The stages of working with a business broker usually include:

1. The Initial Consultation with the seller.
2. Determining the business’s worth through various financial methods.
3. Developing a marketing plan to attract prospective buyers.
4. Structuring deals during the sales negotiations that benefit both buyers and sellers.
5. Coordinating the sale process, including reviewing due diligence and all legal issues and requirements.
6. Closing the deal by ensuring that all aspects of the transaction are completed and the sale is finalized

Before you do sell your business, consult with a broker on what to know before selling a website. That will pay off handsomely in the long run.

Conclusion

To successfully sell your business with a broker, you should: 

1. Maintain clean, well-documented financials.
2. Get the right estimate of your business’ worth.
3. Have your broker vet prospective buyers to avoid the tire kickers
4. Finalize contracts and close the deal

Your business broker will be your expert guide throughout this entire process.

When working with a broker, it’s crucial to be aware of, and to avoid, common mistakes. Doing so helps you prevent frustration and, potentially, financial loss. Key points to avoid:

• Not doing research on the broker to ensure your chosen broker is qualified and follows industry standards.
• Not checking their credentials and professional memberships. 
• Failing to fully communicate your financial goals
• Not reviewing or understanding all terms and conditions before signing any agreement. 

Brokers should excel at:

• Building strong client relationships.
• Maintaining open communication with both parties
• Staying focused on client goals and preferences
• Setting realistic timelines for the transaction
• Educating both parties about market conditions that will impact the sale.

The best traits of a business broker include effective communication, and the characteristics of a successful business broker include strong customer relationship management. These are the best practices for business broker collaboration.

For a lot of eCommerce business owners looking to sell their company, business brokers have become absolute lifesavers. A qualified business broker has the skill and knowledge to successfully guide the sale of your business, including finding qualified buyers, marketing your company, and overseeing the crucial due diligence process.

It helps to know in advance the business broker process.