“How do I sell my business online” and “How to maximize my returns by selling my business online” – are frequently searched terms on the internet. This shows that business owners are looking for any guidance and assistance they can get in order to get the best value when they sell their business. This article is for you, if you have decided or are contemplating selling your business online.
Selling a business is a series of logical steps, some of which act as a critical path for the next. While the actual process may be unique for each business, in general, here are the best practices to get the most value from selling your business online.
Professional Business Valuation
Before you sell your business you must know its worth. Valuation is a process that establishes a selling price by taking into account the current state of your business and future projections. It also factors in intangible attributes such as brand name, customer loyalty, perceived risk levels of the business, its age, etc. One of the steps in the stage is to gather your financial and operation data.
To ensure you get the best returns you must have a selling price established upon firm facts and devoid of emotions. Get together all your pertinent financial information such as sales reports, gross and net revenue, accounts payable and receivable, and outstanding dues (such as taxes, salaries, fees and charges). Legal, contractual and / or regulatory information, too. Your expected selling price is heavily dependent on your business’ current performance.
However, it is not all about sales and expenses though. Buyers are willing to pay higher amounts for businesses that come with low risk of management. This is demonstrated using operational metrics such as online traffic to your store, cart-to-sale conversion, average customer reviews, percentage of returns and exchanges, etc. For a proper valuation to sell your business online, all this information should be collected before proceeding with the subsequent steps.
Overvaluing can stall or prolong the negotiations process while undervaluing can short-change you. Experienced sellers may be in a position to conduct the valuation themselves by calculating their recent earnings, adding their projected growth and multiplying it, overall, by a factor of 2-3. But, those selling their business for the first time will be better off using the services of professional brokers, consultants, or acquirers.
Performance and Process Improvement
If all your financials and business metrics are healthy, then congratulations. Your business is ideally positioned to be sold from handsome returns. However, what if the aforementioned steps result in numbers or areas that are not so attractive. For example, you have low footfall at your online store, have low customer reviews or high returns. These are red flags for potential buyers and will significantly bring down the valuation of your business.
Identifying areas of improvements and gaps in your operations is an opportunity to plug them and make them more attractive to buyers. Scalable and streamlined businesses are highly valued. A low-hanging fruit is creating Standard Operating Procedures (SOP) for the different aspects of your business like sales, logistics, product development, supply chain, etc.. This gives confidence to buyers in their ability to run and manage the business and keep it fully-functional under the new ownership.
While it may incur some initial expenses, it is likely to give you significantly higher returns while selling your business online. You can consult business experts, consultants, and digital marketing firms to help you generate more interest among netizens, create brand awareness, and direct more traffic to your store.
Other Handy Tips
There are several factors to be considered before selling your business online to get the best returns. Proper due diligence is needed before embarking upon this roller coaster. Consider the following:
- The nature and age of your business – the older the business, the higher its value
- The platform to list it on – popular options include selling privately, and using brokers or acquirers
- The kind of buyers you hope to attract – through your professional network, on digital marketplaces, direct competitors
- The reasons for selling your business online – help you prepare for the negotiation process
- The legal structure of your business and if any ongoing litigations need to be closed
- The plan for your employees and suppliers post your exit – will they continue with the new owners?, is there a severance package that you will need to pay?
- Your own exit-strategy and what you intend to do with the proceeds of the sale
In Summation
Selling your business online is not an easy decision. The process can be long and test your patience. However, the end can be rather rewarding. Follow the above-mentioned best practices to ensure your hard work pays off handsomely. Read this guide for more tips on how to sell a business online for maximum value.
