An eCommerce business means different things to different types of owners. For some, it may be like an offspring with a lot of personal emotions invested in it. For others, it may be a means to secure funding for other ambitions in life. For yet another type of entrepreneur, it may be a target-driven enterprise, and upon its successful achievement, it may be time to move on. While the idea, meaning, and reasons may vary, there comes a time when you too will consider putting your eCommerce business for sale. And when it happens you need to be prepared and well-informed in order to conduct the proceedings efficiently with the aim of getting the best returns for your business.
Factors To Consider
Before you embark upon this journey, there are some vital factors you need to consider that include, what should be the asking price for your business? To whom should you sell it? How to list your eCommerce business for sale? What are the legal and financial preparations that you need to make? What happens to your employees, partners, vendors, and suppliers? Let us examine some of the key factors to attract potential buyers and carry out the selling process seamlessly.
Prepare Your eCommerce Business For Sale
One of the foremost steps that you need to take in this regard is gathering your data. There are two aspects to it.
- Business Performance Data: Buyers are looking at an eCommerce business for sale that is well established and able to continue independently under the new ownership. The key performance indicators (KPIs) like customer traffic, annual sales, click-to-sales ratio, returns and replacements percentage, and cost per acquisition are just some of the important metrics that can give buyers confidence. Most of this information should be easily available through the platform that your business operates on like Shopify etc.
- Financial Performance Data: Apart from a well-functioning business, buyers also look for financial stability. It is only natural for them to want to verify the financial health of your business. For this purpose, it is recommended to have recent information handily available, such as profit and loss statements, balance sheets, audited tax statements, revenues, cash inflow, total expenses, loans and other payables.
Determine the Price For Your eCommerce Business For Sale
Business valuation is a broader concept that takes into account several tangible and intangible aspects. But the end goal is the same, establishing the asking price for your eCommerce business for sale. Tangible aspects include your current financial and business performance, your growth rate, projected sales, the cost of existing infrastructure, etc. Intangible factors include your brand recognition and value, online buzz, word-of-mouth reviews, customer loyalty, etc.
The key to the valuation exercise is to tread the delicate balance between overvaluing and underselling. In other words, you do not want your asking prices to be unreasonably high which puts off buyers from showing any further interest, however, you should also be careful to not sell it for lower than its true potential. If you are seasoned in the art of selling businesses, then you may have devised your own tools or concepts for valuing a business that has worked for you in the past. However, if this is your first time putting up your eCommerce business for sale then you can do with some professional expertise in this regard.
Methods To Sell Your eCommerce Business For Sale
At the conclusion of the previous step, you would have a clear figure to sell your business for. Now, you need to identify the avenue and medium to list your eCommerce business for sale. Some of the common ways this is usually done include:
- Selling Directly: Suited to the more experienced entrepreneurs, selling directly through online marketplaces or to a competitor can be a cost-effective exercise as there are very few overheads involved. If you have the wherewithal for finding a buyer on your own, then this method may suit you the best.
- Selling Through a Broker: Other business owners, though, may need a helping hand in this process. A broker or professional consultant might be a convenient option as you can offload the bulk of the hassles such as identifying buyers, gathering business data, and conducting negotiations. Naturally, this comes at a cost in the form of brokerage and commissions that can either be a fixed cost or a percentage of the sales proceeds. In either case, it comes out of your own pocket.
- Selling To an Acquirer: Many sellers have turned to acquirers or direct buyers for their eCommerce business for sale. The companies have a well-established network and infrastructure to take over businesses and either integrate them on their existing platform or expand on their inherent potential. Right from due diligence to data gathering to business valuation, all aspects of the selling process are conducted smoothly and seamlessly.
The reasons for selling may be your own, and so might your plans for the future. However, every business owner aims to maximize returns for the sale of their business. Use this guide to traverse the steps successfully, understand the key factors involved, and choose the ideal method for selling your business.
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