Here’s What I Learned - tips to sell an online business
Hey, guess what? I sold a business! Yes, a full-fledged website with stock, customers, an email list, and social media accounts. I feel totally legit calling myself an entrepreneur now. After building it from scratch, the money finally settled in escrow, and everything went through. In this blog post, I want to share some valuable tips I got from a sales agent on making your business more valuable, either as an asset to your family or for selling down the line.
Tips for Making Your Business More Valuable
To make your business more attractive to buyers, consider the following:
Systems and Processes: Have clear systems and processes in place, and automate where possible to make the business easier to run. This includes setting up staff, automations, and ensuring the business can operate smoothly without you.
Supplier Relationships: Work with reliable suppliers and have backup suppliers to ensure continuity. The lead time, order quantities, and local supplier availability can significantly impact the business’s attractiveness.
Customer Base: Reach out to international customers and highlight any global presence in your business listing. A diverse customer base, particularly in large markets like the US, can add significant value.
SEO and Organic Traffic: Improve your website’s domain authority and focus on organic search traffic to reduce marketing costs. Better Google Analytics reports and a strong SEO strategy can demonstrate the business's long-term viability.
Email Marketing: Build a clean and monetized email list, and use email marketing to generate a significant portion of revenue. A healthy email list indicates a loyal customer base and consistent revenue stream.
Sales Channels: Sell on multiple platforms like Amazon or other marketplaces to demonstrate versatility and stability in your business operations. Diversifying sales channels shows potential for growth and reduces reliance on a single platform.
My Journey and Key Learnings
I started two e-commerce brands in 2020 and sold one of them in November 2023. The sale process was finalized just a few days ago, and it was an incredible experience. I learned so much from a phone call with a sales rep at Flipper, the marketplace where I listed my business. Here are some of the key takeaways from that conversation:
Valuation and Multiples: My website was sold for a 0.8 multiple of its annual profit. This is relatively low compared to the potential 2x to 4x multiples that well-optimized e-commerce businesses can achieve. This taught me the importance of having a well-structured business with solid financials.
Operations: The efficiency of your operations matters. Questions about my supplier relationships, lead times, and fulfillment methods highlighted the need for robust operational systems. A business that runs smoothly and efficiently is more attractive to buyers.
Global Reach: Most of my customers were in Australia, but having a significant customer base in the US or other large markets could have increased the business's value. International presence signals growth potential.
Marketing Strategies: Heavy reliance on paid marketing through Facebook and Instagram was noted. While effective, it’s costly. Balancing this with strong organic traffic through SEO can make a business more profitable and appealing.
Customer Acquisition: Understanding where your customers come from and how you acquire them is crucial. The sales rep emphasized the importance of having a mix of paid and organic customer acquisition channels.
Profitability and Growth: Highlighting the business's growth over the past 12 months, including percentage increases in revenue, was important. Buyers want to see a trend of growth and profitability.
Business Presentation: How you present your business matters. Having detailed Google Analytics reports, clear financials, and a strong narrative about the business’s journey and potential can make a significant difference.
Moving Forward
Selling my business was a roller coaster of emotions, but it also provided me with invaluable experience and insights. I’m excited about the future and plan to start another e-commerce brand in 2024. This time, I’ll implement all the learnings from my previous venture to build a stronger, more valuable business.
If you’re in the early days of your online business, or even just thinking about starting one, I hope these insights help you. Building and potentially selling a business is a challenging but rewarding journey. Remember, the key is to create a strong foundation, focus on growth, and be prepared to adapt and learn along the way.
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