The decision to put your eCommerce business for sale, while an emotionally overwhelming one, is sometimes inevitable. Different people have different reasons for doing so, but all are compelling in their own way. For some, it may have been part of the original plan since its inception; set up a thriving business and cash in on its success. For others, it may be a natural progression towards moving on to other ventures. For some others, still, it may be a case of burnout or lack of interest in the status quo. Regardless of what your unique reason may be, being clear about it is an important first step in the journey that lies ahead. Here is a useful guide to help you navigate the waters of listing your eCommerce business for sale.
Prepare The Groundwork
While this is an umbrella statement, it entails a lot of business housekeeping activities. Let us break this down into two main subcomponents, for ease of understanding and acting upon.
- Gather Your Financials: Naturally, when any potential buyer considers an eCommerce business for sale, the financial health of the business is one of their foremost concerns. Not many will wish to take over a business that is stuttering financially, is in debt, or is unable to generate sufficient revenues to stay afloat. This would directly relate to pumping more capital to bring it back to its feet. Buyers prefer businesses that are self-sufficient, with a steady revenue stream, and with minimal outstanding dues. As a successful entrepreneur, you must already be in the habit of keeping meticulous details of your business’ finances. It is now time to organise the records more methodically for quick reference. Your records should include (but are not limited to), recent tax filings, profit & loss statements, sales figures and net income data, a list of accounts (both payable and receivable), details of wages and supplier payments, and any loans or other dues.
- Collect Your Operational Data: Financial health, while very important, is not the whole and sole of business. Its operational sustainability is, also, a highly desired attribute. An eCommerce business for sale is made more desirable in the eyes of buyers when it has a business model and performance that can withstand seasonal swings and other disruptive forces. Being on an online platform, metrics such as average customer reviews, online traffic to your store, sales conversion ratio, returns and replacements, all tell the story of your business’ performance and its likelihood of continued success. Collect this data with the viewpoint of identifying any noticeable gaps, as plugging these gaps is likely to raise the value of the business and get you better returns for it.
Get Your Business Valued
Having established your business’s health, it is time to put a price tag on it. This is easier than done as a business, unlike a commodity, has several intangible attributes associated with it. These can be factors such as age, brand recognition, diversity in inventory, sources of traffic, and many more. Undervaluing your business or selling it for a price lesser than its worth is one of the biggest anxieties that an entrepreneur goes through. Typically, the most common method used to evaluate a business is the Earnings Method. In this system, your annual revenues are multiplied by a factor ranging from 1.5x – 3x to arrive at the final selling price. It is also recommended to do a bit of market research to get a sense of the price range in which businesses similar to yours have been sold and bought. This will help you determine if your personal valuation is on point or off the mark.
Choose Your Listing Mode
Now, you are ready to put your eCommerce business up for sale. The question that you need to ask now is, what medium to list it on, to complete the sale. A few popular options include:
- Selling directly: The most straightforward way is to sell directly through your own business network. This does entail a fair amount of effort on your part though as you will need to identify the buyer and carry out the entire process on your own. You may also choose to sell to a direct competitor. This can be quite fruitful, however, if you intend to stay in the same industry then you need to be wary of sharing trade secrets.
- Using online marketplaces: Another way of directly listing your eCommerce business for sale, is through online marketplaces or digital yellow pages. The platforms can help you identify buyers and provide the option to list for free or pay a premium to have your listing stand out from the crowd.
- Sell via brokers: Several first-time sellers prefer to conduct the sale through brokers or other intermediaries. Not only does it reduce the strain on their personal time and resources, but brokers can also help them traverse the tricky negotiation phase. This comes at a charge, of course, and you need to do your cost-benefit analysis before choosing the option.
- Sell to acquirers: A very popular mode of selling eCommerce businesses is by letting professional acquirers take them over. Not only does this assure a fair price for your business, but it also frees you up from the hassles of managing the different aspects of the sale, on your own.
The journey, overall, can be tricky and challenging. But, if you follow the steps diligently, it is likely to be a rewarding one for you.
