10 Tips For Selling Your Online Business Faster & Smarter
Yuli Azarch | January 26, 2018 | No Comments on 10 Tips For Selling Your Online Business Faster & Smarter
Lately, I have been working on selling my Amazon online business. I’ve spent a lot of time researching; I’ve learned a lot talking to potential buyers as well as from the process of actually setting it for sale. I still haven’t sold it, but this process has been a fantastic learning experience. Thanks to it, I’ve learned that it is possible growing an online business and then sell it for more profit.
In today’s episode, I want to share with you 10 tips for selling your online business faster and smarter directly from my experience so you can do it and earn more money.
Lessons from this episode:
- Invest in your financials (01:01)
- Minimize your necessary expenses (03:09)
- Do your due diligence (04:39)
- Make sure that structure of company is convenient (05:47)
- Make sure you document stuff (07:21)
- Do not make it personal or emotional (08:24)
- Sell at the right time (09:13)
- Get professional help (10:51)
- Invest in your branding (12:01)
- Prepare (13:01)
10 Tips For Selling Your Online Business Faster & Smarter
1. Invest In Your Financials (01:01)
Most small businesses don’t invest in financials. They don’t even invest in an accountant or in having their financials properly structured. I was one of them, and I was even making a profit, but I didn’t pay financials much mind, something that made many people worry.
To be honest, I spent much time without an accountant.
Afterwards, –even though it took me a while– I not only hired an accountant but also started to invest a lot in financials so I could have everything structured in the right way because when you sell your online business, your financials are kind of the core of the sale. That’s what people are looking; that’s what every buyer wants to see.
The better financials you have, the higher the chances you have of selling your business.
In my case, it took me a long time to clear up my financials so I could present my business to buyers. Unfortunately, it wasn’t really well-structured. I didn’t have much experience, and I needed to call an accountant to help me present everything better and in a smooth way to potential buyers.
Also, remember not to include personal purchases or any activities that don’t include your business. Keep your numbers clear and simple; it will help you sell your business faster and smarter. Many people make this mistake and include their personal expenses inside their business and even keep their business’ money in their personal bank account. This is all a huge mess because if a buyer wants your business, it would have to see all your bank information to see what’s going on.
So, keep business and personal expenses separate. Ideally, set the base for twelve months of just transactions related to the business to make your finances clearer, making it easier for you to sell your online business.
2. Minimize Your Necessary Expenses (03:09)
If you know, you’re gonna sell, minimize your expenses. The formula is very simple, the evaluation of any business is based on the seller’s discretionary earnings from the last 12 months.
Basically, check your business’ last 12 months profit. Fewer expenses mean a higher evaluation and more earnings, which literally translates into more money in your pocket.
So, minimize expenses. Specifically, many strategies in business require you to have a big number of expenses for a long period to actually get a return. Sometimes, it can be a year of expenses just for you to see return.
For example, if you’re in content marketing or PPC, in the beginning, you might not be profitable, but if you stick to it for 6 to 12 months, you’ll start seeing the money back.
However, if you know you want to sell your business, many of these strategies might not make sense because they mean losing money now to make money later. But at the end of the day, when you evaluate your business, your buyers will only see the last 12 months. Nobody will care what could happen in the future or where your business is going.
So, if you’re a small business and you’re growing, make sure you have the right strategy. Just go for what’s necessary and don’t make unnecessary risks with the money because fewer expenses mean a higher seller discretionary earnings, translating into more profits.
3. Do Your Due Diligence
Spend money on an attorney and clear up all the possible legal confusions. During a purchase, your buyer might want to do the diligence and make sure everything is legal and tactical. My advice is, be practical and take the step before having any buyer so you know everything is good. Besides, every buyer wants to know what they buy is legal.
Even if you’re not doing something wrong, I believe is worth to invest some dollars on a lawyer to bulletproof your business. Also, this helps you to check the terms of your service, add, or even remove disclaimers. And, then, when you talk to a buyer you can say you have an official opinion from a lawyer, and you can present it to them.
This is really important because every buyer wants to minimize risks so do your due diligence before and save yourself some time and hassle during the selling process.
4, Make Sure That Structure of Your Company Is Convenient (05:47)
Let’s say your business is well-structured and it’s a legal entity. In this case, be open to small businesses loans to make it easier for a buyer in the United States, which is where most of your potential buyers might be. Nowadays, that’s the way most people buy small businesses.
They take a loan from the bank, and once they know the business they’re buying is a USA entity, it makes it everything easier for them to get a loan. If the business is not American, they won’t get the loan. This will leave you with less cash and make the whole structure much less beneficial for you.
If you know ahead of time you want to sell your business, maybe in 12 months or more, restructure your legal entity. Consider setting your company in the US, in the UK, or any other place but make sure you get advice from a broker because this structure will give you a better evaluation and, eventually, more bang for the buck.
Remember that buyers want practicality and even though your buyer might not be in the US, my experience tells me most of them are.
So, consider this restructuring, you’ll thank me later.
5. Make Sure You Document Everything (07:21)
Repeat after me: documentation is crucial. Even if you have employees that know everything, any buyer would want to minimize risks, particularly if one of those employees leave. Basically, they don’t want to get screwed; for that reason, make sure you document everything you do. Your processes, your clients, your expenses. Everything. It will help you both in the sale process and the day-to-day operation. Documentation is crucial and having clear processes will make you more efficient.
Also, when you have everything documented, your potential buyers will feel safer, which adds to the value of your business.
6. Do Not Make It Personal or Emotional (08:24)
This is one of the main points because many people are emotionally connected to their businesses. And sometimes, this could make the selling process tougher on you, prevent you from taking rational decisions, or even not sell your business altogether.
When you’ve already made up your mind about selling, make rational, business decisions. Make decisions based on numbers; what’s right for the business and what’s right for you and don’t make it about your emotions.
There is not too much benefit, in my opinion, in making it personal. But it can be emotional; you may have built it and worked a while setting this business, but sometimes you just got to let go.
Click the button and detach; don’t make it personal. Make it a business decision.
7. Sell at The Right Time (09:13)
Let’s picture this. If your business is growing month after month that might be a great moment to sell. When people are looking for your business, that’s the moment buyers will be more interested because people are looking for what you have to offer. Also, remember that when your business is growing you get a better evaluation and a good evaluation is everything when it comes to selling.
When your business is growing, you also get a higher business multiplier which also adds to your evaluation. So, sell it when it’s growing. When more people are looking for it, and the buyers’ interest soars, and you get better prices.
On the contrary, if your business grew stagnant over the last 12 months you can still sell it, just make sure you don’t make unnecessary expenses. You might get less, but you’ll still win something.
Also, if you know you’re not gonna have the time or the energy to maintain it, sell it. Just don’t do it randomly and prepare yourself. Timing is crucial. For instance, before the end of the year, some people want to spend money before taxes, so it’s also a good time for you to sell, leading to a better, faster sale.
8. Get Professional Help (10:51)
Currently, I’m using a broker to sell my business. There are many great websites which can help you, and, for someone like me who doesn’t have much experience selling an online business –it’s actually my first big sale– and who might not have a network of potential buyers, a broker is an excellent way to get attention.
Also, the broker is guiding me through the process, from advice on how to conduct the sale to how to conduct my financials. He’s guiding my whole process and, of course, getting a percentage from it, which is the broker’s main motivator, but he’s also bringing much value to the process.
I believe getting professional help is really worth it when you’re selling a business. If you go on your own, you’ll end up wasting more time and resources; it might even cost you more money than a broker unless you have a wide network of buyers.
If you do, well, great, go for it, but if you don’t you might need the extra help.
9. Invest in Your Branding (12:01)
Buyers and people, in general, don’t wanna buy commodities; they wanna buy from brands. The more you have a brand behind what you’re selling, the better image you project to others. You don’t have to have the best brand in the world, but when you invest some time and thought into what makes your company unique, this will give you an edge in the market because you can to give your clients an better experience.
Again, people avoid regular commodities and prefer something with a name and a story behind so they connect with the product. So, if possible, invest in your brand because it’s going to make money in every step of the way.
10. Prepare (13:01)
The earlier you start preparing all the nine tips above, the easier it will be to structure and sell your online business. In my case, I don’t think I prepared myself as much as I could have and everything ended up taking much more time than I thought. I had a worse evaluation and fewer things ready, which led me to waste more energy in getting things done rather than focusing on my business.
Start preparing. Selling your business is not an overnight decision. It might take you a month, two, twelve, or even twenty-four like me. Prepare, make sure you have things ready and everything will go much easier and faster than you think.
Last Words and Takeaways
Preparation is one of the keys to success, and it’s going to save you headaches, give you more money, and help you set up your next big idea.
- Don’t underestimate the importance of professional help
- People buy things they can connect with
- Keep your expenses low
- Never make it personal
- Set up a convenient business structure
- Keep everything documented
If you found some of these tips helpful, leave me a comment and a review. I appreciate your time.
Live a fuller, richer life.
All the best,