As of 2023, there are 2.64 billion digital purchasers. This represents 33.3% of the total population. So, roughly one in three people you meet is an active online shopper.
However, for one reason or another, many eCommerce business owners at some point decide to sell their online businesses. For any entrepreneur, this is a bold step. You’ve put in effort and resources to create your concept, gain a client base, network with reliable vendors, and establish your brand’s credibility.
Now that you’ve reached the point where you’re considering selling, there are a few things you should think about first. Whether you’re looking into how to sell an Amazon business or any other eCommerce store, we’ve put together this handy guide to give you a strong understanding of the steps to take for maximum profit.
Update Your “Storefront”
It may seem paradoxical to make improvements to a business you want to sell, but your eCommerce website is essentially your shop. The best way to guarantee a sale is to make the storefront more enticing to prospective buyers.
If you’ve recently gotten rid of stock, discovered that certain products aren’t moving, or want to highlight some of your best-selling items, updating your website is a must. Also, if your website is outdated or crowded, it’s worth the effort and money to simplify it and satisfy visitors.
Your tweaks don’t need to be major, and you should always give the buyer leeway to make further adjustments. Having a website that is well-organized and simple to use can increase sales significantly.
Check Your Finances
An organized company is one of the most appealing features to potential buyers of an online store. Your financial stability can be your biggest selling point, and a company that can maintain its records in order will have an easier time persuading purchasers to take over.
You should have at least these things in place before selling your online store:
- A financial statement
- A profit and loss account
- The statement of cash flows
- The past three years’ worth of your tax returns
Hiring an external accountant to organize your finances and generate a P&L (profit and loss) statement is another viable option. For online stores, this is quite a common procedure.
Additional Information You Should Include
Potential purchasers will do due diligence on more than just your finances. By understanding your customers, streamlining operations, and maintaining supplier relationships, you can add value to your business before selling it.
Connections With Vendors
Notifying your suppliers of the impending sale of your eCommerce company will help guarantee a seamless transition and continuity of service for your customers. It’s also good manners to not leave your business partners in the dark or on the hook for anything unexpected.
Buyers also like proven customer lists. Rather than starting from scratch, the new owner of your eCommerce business will be able to continue where you left off thanks to your subscribers and email lists. It’s far simpler to sell to an existing client than to get a brand new one, so customer contact databases are invaluable.
Standard Operating Procedures
Having a list of standard operating procedures (SOPs) is also a good idea. This is the company’s day-to-day operations, which might seem obvious to you but may need some training for a new buyer. Making the transfer to new ownership easier with an SOP can save you time and give your staff peace of mind as you prepare to leave the company. It also provides a training template for the next owner, making scalability easy.
Calculate the Worth of Your eCommerce Business
It’s not as simple as just throwing out a figure and hoping a buyer bites when trying to determine the worth of your eCommerce company and how much to sell it for. The emotional involvement and vested interest of a business owner might lead them to overvalue their company, while the need to sell quickly can cause them to undervalue it.
You should seek an impartial third-party opinion on your company’s worth to make sure you haven’t overlooked anything. Appraisers will accurately catalog and evaluate all of your company’s assets, even those you may have overlooked.
Buyers and appraisers alike will often consider the following factors when establishing an eCommerce company’s worth:
- Website visitors
- Patents and trademarks
- Dependable manufacturers
- Intellectual property rights
- Brand awareness
- Delivery and inventory management
- Well-established clientele.
Finalizing the Deal
Once you’ve found a buyer for your business, you should make sure that the deal goes through to the end. Buyers will always seek a due diligence phase, which typically lasts around two weeks if you’ve organized your affairs and immediately provided all of the information they need.
The next step in the sales process is for the buyer to sign a document called a letter of intent (LOI), which details the obligations of both the buyer and the seller. The assets, URLs, and trademarks offered for sale; the acquisition price; the closing date; and the agreed-upon diligence period.
A letter of intent can also specify the parameters of the transaction, such as whether or not the seller will remain on board to assist with the handover.
The vendor should check the buyer’s financial stability to make sure they can pay for anything they’re buying. There are a variety of different types of sales agreements, each with its own set of legal responsibilities.
While a letter of intent is a good first step, it is not legally binding, so it is wise to also include a non-disclosure agreement (NDA) for the buyer to sign so that they can conduct a thorough investigation of your company before purchasing. Once due diligence is complete, it is important to retain legal counsel for the contracting process. It can be beneficial to consult with a lawyer at any stage of the process.
Choosing to sell your online store is tough. If you’ve done your homework, selling your business might be a great opportunity to cash in, but for many business owners, it’s also a method to secure the continued success that they’ve established.
Find a buyer who can be accommodating throughout the sales process and trustworthy with payments. The success of your eCommerce business depends on entrusting your hard-won clientele and partnerships to the right people.