Strategies for Selling Your Online Business
If you’ve been steadily building an online business that you’re now contemplating selling, you’re part of a growing movement. That means there are more resources available than ever before to help you, but also significantly more competition.
Strategies for Selling Your Online Business
If you’ve been steadily building an online business that you’re now contemplating selling, you’re part of a growing movement. That means there are more resources available than ever before to help you, but also significantly more competition. Values continue to skyrocket, though, and now could be a great time to sell your online business. So as you weigh your exit options, here are some things to consider.
Why Sell a Profitable Business?
Building a thriving, profitable business is no small feat. So it might seem like a bad idea to sell once things are finally off the ground. Buyers get anxious when you sell for no apparent reason, or when you’re selling because the business is not profitable. But there are plenty of good reasons to sell. They include:
· You need money to invest in other projects.
· You’re no longer committed to the business.
· You’re ready to retire.
· You want to spend more time with your family.
How Valuation Works
The most common mechanism for determining a company’s value is to multiply average monthly net profit over a year by a figure usually ranging from 35 to 65. Online business buyers often are willing to pay a larger multiple for successful businesses that promise to deliver a significant return on investment. That means you must position your company as a successful and profitable entity that buyers can expect to extract significant income from.
Getting the Highest Valuation for Your Business
While there are plenty of valuation formulas out there, there is no objective, one-size-fits-all strategy for valuing a business. Value is always in the eye of the beholder, so your job comes down to convincing the buyer that your company has value. To get the highest possible valuation:
· Begin exit planning early in the process. Ideally, you should continually revisit an exit strategy for the life of your company. But at the very least, begin working with an exit planning team 3 to 6 months in advance of your intended departure.
· Prepare your business for an exit. Structure your business to be a sellable asset. That includes getting the books in order, ensuring you have the right management team in place, and reducing the dependence the business has on you.
· Record essential processes. It’s critical for the buyer to be able to hit the ground running from day one. Assemble a guide to running your business in your absence, and make sure your team understands standard operating procedures.
· Plan how and when to tell your team. Your team is going to have a lot of questions about your departure. Be prepared to be honest, to incentivize them to remain on, and to protect them as part of the negotiation process.
· Get the right help. Selling your company should not be a DIY process, no matter how much experience you have running your company. The right advisory team can help you extract the most possible value from the sale while lending credibility to the negotiation process.
