Have you recently considered selling your business? Or perhaps you are thinking about selling in the future?
You may be thinking, “But this business is my baby; I’m never going to sell!” in “I just started; I don’t need to worry about this now!” .
Selling your website or online business may not be on your radar right now, but that could change in the future, and if it does, you don’t want to be racing at the last minute to get everything in order. Even if you never sell, the steps in this guide will prepare you to run your firm with greater expertise and efficiency than the vast majority of business owners. And this offers you an advantage over the competitors.
You should also remember that your particular circumstances may change. Maybe a family member becomes ill and you need money for medical bills. Maybe you decide to take a few years off and travel the world (if you haven’t already). Perhaps you’d like to reinvest your funds in another company venture. Having a business asset that can be sold at a moment’s notice can provide you with numerous opportunities.
In this post, we will lead you through the steps necessary to prepare your internet business for sale. We’ll walk you through what you need to do in the early phases, how to calculate the value of your business, when to sell, and what you should do in the months before the sale.
Here are the types of businesses that are commonly sold:
- Google AdSense/Display Advertising Sites (Individual sites or packages)
- Amazon Affiliate Sites
- Affiliate Sites
- Dropshipping Sites
- Shopify/ eCommerce Stores
- SaaS Businesses
- Lead Generation Sites
- Amazon FBA
- Mobile Apps
- Productized Services
Built to Sell — How to Prepare Your Business From the Start
Before you consider selling your firm, you should get a few things in order as soon as possible, such as effective day-to-day operating procedures, consistent and accurate data, and simple, healthy finances.
Historical data and effective methods will assist you justify your asking price later on. Once the due diligence process begins, potential buyers will request access to all of this information. The sooner you arrange and begin gathering this information, the more valuable your company will be and the simpler it will sell.
There are further advantages to going through this process as a business owner:
- You can streamline operations because you have well-organized systems and processes.
- You’ll have reliable statistics and data to indicate how your firm is doing.
- Assists you in identifying any weaknesses in your business and areas for improvement.
- Automates procedures, allowing you to scale and grow your business without having to rely only on yourself.
- When selling a firm, prospective purchasers want to know that their money is being invested in an asset rather than a liability. Buyers will want to see you demonstrate excellent systems as well as data and analytics to prove the business’s profitability.
Preparing yourself for sale early increases the possible profit you can generate from the transaction. Whether you run a little business or an eight-figure business, you must take certain actions to properly prepare it. A business that has been profitable for 12 months would sell for more than a business making the same money but only having six months of data.
Here’s what you should do as soon as possible to ensure you have enough evidence to back up your asking price.
Analytics – Collecting Accurate Data About Your Business
When evaluating an internet business, customers consider how much traffic it receives and where it comes from. To provide this information, you’ll need to track the visitors to your website.
There are programs available that allow you to track traffic on your website, such as Google Analytics (or Clicky if you don’t want Google tracking your every move).
Why is it better for the buyer?
When looking for blogs for sale, buyers want to ensure that the reported traffic is accurate. This is useful not only for WordPress sites, but also for e-commerce websites. Your e-commerce platform may capture sales data, but an analytics platform provides significantly more traffic data. Anyone may complete a spreadsheet and say, “Hey look! “I get 2 million hits per day!” Traffic is the lifeblood of an internet business; having real statistics that a buyer can view helps to demonstrate that the traffic is legitimate and that they are purchasing a genuine asset.
Analytics allows businesses to monitor where the traffic is coming from and ensure that all of those hits are actual leads rather than spam traffic from a questionable site in Siberia.
The data you collect can also help potential purchasers understand what conversion rates you’re generating and determine whether there are chances for development once they take over. All of these data elements assist a buyer in determining whether purchasing your firm is a good deal for them. The more information you share, the better.
Why is it better for you?
As a business owner, you’d rather have some analytics than no data at all. Analytics provide a history against which to measure performance as your firm grows. It allows you to evaluate and continuously improve your product conversion rates.
Analytics may assist you monitor your traffic and ensure that you are not receiving spam visitors, which could harm your Google rankings. You may even utilize analytics tools to go further into how customers use your site and determine whether the $10,000 you just spent on a sales page is converting or not. It will also make it easier for you to determine whether the recent reduction in sales was due to seasonal factors or a more serious problem.
Bonus Tip: Keep a notebook or spreadsheet somewhere to record any significant dips in traffic and make comments on why they happened. When a customer inquires about what transpired, you will be relieved to have this information on hand.
Finances — Knowing Your Numbers and Getting Your Books Straight
Buyers want this information given in a rapid and easy-to-understand fashion, and they want to see a clear distinction between your business and personal accounts. So, if you’re still using the same account for your business and personal expenses, STOP RIGHT NOW. Not only is it a disorganized method to manage your company’s money, but it’s also a headache for a potential buyer looking to assess your company.
Why is it better for buyers?
Buyers require proof of revenue to determine the worth of a business they intend to purchase. “What’s your net monthly revenue, gross margin, and cost of goods sold?” they will inquire. They’ll want to know how much your company spends on customer acquisition and expenses.
Buyers ask these inquiries to determine whether your firm is successful. One ignored expense can spell the difference between a profitable firm and one that is losing money.
When someone buys your company, they may assume any debt that it owes. A buyer needs to know that you have paid all of your expenditures and do not owe anyone money. Making sure your accounts are in order is a simple win when selling your company to a potential buyer.
Paying your invoices on time is regarded as a positive indicator of a professional company connection. A company that delays or misses payments cannot guarantee that its suppliers will remain loyal after the sale. If it’s a primary supplier, having them walk might mean the end of the business. This is exactly the type of problem a buyer is looking to avoid.
Making sure your records are in order allows your purchasers to see that your firm is successful, that your supplier accounts are in good standing, and that all applicable taxes have been paid.
Why is it better for you?
When your business finances are in order, it’s simple to see how much money you’re making, detect any anomalies in your figures, analyze your profit margins, expenses, and income, stay on top of your taxes, and better assess the value of your company.
Keep track of things with a profit and loss statement (P&L), which should be updated on a monthly basis. It’s critical that these numbers are correct, because purchasers will be combing over these paperwork, and anything “off” may turn them off the deal.
Keeping a profit and loss statement can be as simple as maintaining a spreadsheet. However, if you own a successful firm, investing in professional cloud-based accounting software is a no-brainer. The cost readily pays for itself, and the ability to electronically import your bank statements into the software simplifies your life as a business owner.
If doing the books isn’t your thing, hire an accountant or a bookkeeper. If you use cloud-based accounting software, your bookkeeper can manage your books remotely and notify you if something is wrong. A qualified accountant may also advise you on how to lower your tax liability or structure your firm more efficiently, but keep in mind that they are more expensive than a bookkeeper.
Establish Systems — The Benefits of Creating SOPs
A Standard operational Procedure (SOP) is a complete operational document for all parts of your firm. Basically, you write down how you handle different duties such as product selection, keyword research, writing product listings, SEO optimization, content production, and so on. Begin with the simpler activities, and then progress to more complex ones.
Why is it better for the buyer?
Buyers are not seeking for a job; they want to acquire a business. Many purchasers simply want to invest in a well-oiled machine that they can run without too much effort while they sit back and collect their paychecks. If the business relies on the owner doing the majority of the work, it becomes less appealing to most buyers. Creating SOPs fixes this problem.
Having SOPs in place makes it much easier for a buyer to scale and grow the firm. If a buyer sees potential for future expansion, the business has more value.
Why is it better for you?
Creating SOPs may appear to be a difficult sell: it takes time when you don’t already have any. However, once SOPs are in place, you will free up a significant amount of your time.
This is why you should start designing your SOPs as soon as possible, even before you hire your first employee. Every time you complete a business-related task, ask yourself, “How can I turn this into a system?” Write out the complete procedure, step by step.
When you ultimately decide to expand and hire people, you will save endless hours training them. SOPs can also help identify Key Performance Indicators (KPIs) that can be utilized to assess staff performance and incentives.
Once you’ve established a method, you can easily revisit the process to determine if it can be simplified or streamlined. SOPs enable you to always look for methods to enhance and expand your firm. When something goes wrong, SOPs will assist you determine whether the problem is internal or external, as well as how to remedy it.
Robert Kiyosaki famously claimed that you should work “on” your business rather than “in” it. SOPs let you to take a step back and spend less time on the tedious labor, allowing you to concentrate on the strategic growth of the business. Effective processes can help you build and grow your firm faster than if you were flying blind, thereby increasing your sale price.
The benefits of having more time for other tasks will far outweigh the time spent developing these systems.
Now that your firm is in tip-top shape, let’s talk about how to estimate its value and when it’s time to put it on the market.
When’s the Right Time to Sell?
The ideal timing to sell will depend on what you hope to earn from the sale. What are you aiming to accomplish? Is it to cash out of one business to establish another? Are you planning to use it to pay down your mortgage? Is a five-figure sale sufficient to meet your objectives, or do you require a six or seven-figure exit?
Once you’ve determined your end aim and what you hope to earn from selling your business, you can use a valuation technique to estimate the potential sale price. This formula helps you calculate how much net profit you need to make in order to meet your exit target for the sale of the business.
The valuation formula consists of two factors:
- The average net monthly profit (profit minus expenses) for at least 12 months
- The sales multiple
The formula looks like this:
[6-12 Months’ Average Net Profit] x (20 to 60+) = Listing Price
Work backward from your estimated buyout price.
Assume you wish to sell your business for $500,000. Your multiple can range from 20x to 60x+. For this example, we’ll go with a conservative multiple of 26x. Divide your preferred sale price of $500,000 by 26. That will result in an anticipated $19,230 net monthly profit, implying that your business must generate $19,230 in revenue on average, excluding expenses, in order to be sold for $500,000.
Establishing your monthly income target allows you to predict how long it will take to attain it and begin considering strategies to improve the firm in order to increase profitability.
You’ve decided on your optimum sell date and are working toward it. Keep working on improving your business, and when you’re six months out from your target date, it’s time to become serious.
6 Months Out From Selling Your Online Business
The six-month mark is an excellent opportunity to examine your company’s performance and ensure that everything is in order. Consider this an opportunity to achieve some quick wins while also addressing those nagging concerns you’ve been putting off.
It also allows you adequate time to address any obvious difficulties that may arise when auditing your organization. Six months is a sufficient time frame to make major changes that may have a good (or negative) impact on your company’s cash flow and directly impact your final valuation.
To get professional exit planning guidance, book a call with one of our Sales Advisors. During this free 30-minute call, they will be able to provide you with an exit strategy that maximizes the value of your firm.
Clean up your SEO.
To be clear, this is not an SEO guide. SEO is a vast and sophisticated topic that is beyond the scope of this article. Nonetheless, SEO is a vital component of internet company, and as a business owner, you must have a fundamental understanding of how it works and what to watch for. Here are a few quick tips.
Check for duplicate content.
Google’s algorithm can occasionally struggle to distinguish between the original source content and a duplicate. If you discover that your pages are not ranking in Google, check to see if duplicate content is the cause. (For a complete discussion of how Google handles duplicate content, see here.)
There are two possible explanations for duplicate content: someone stole it or you mistakenly generated two of the same thing, such as numerous listings for the same product.
You can check for duplicate material in several ways:
You can enter the following directly into Google: “site:yourecommercewebsite.com [Insert Content Title Here]“.
Alternatively, you can run your work through Copyscape, a service that searches the internet for content that matches yours.
If you are concerned about someone less scrupulous taking your high-quality content, you have a few options.
Step 1: Request that the offender take down the duplicated content.
Sometimes being courteous and asking gently will get you the outcomes you want. Offending site owners may be unaware that their site contains duplicate content; they may have attempted to save money by cutting corners with their content supplier, resulting in poor quality or plagiarized content. It’s advisable to contact them first and see if it can be taken down. If you are unable to contact the site owner or they refuse to respond, you may try…
Step 2: Rewrite the material.
If you haven’t spent a lot of money on high-quality content or copywriting, you could find it easier to do a little rework. Yes, it’s painful and unjust, but if the person is unresponsive or refuses, this may be the simplest line of action.
Step 3: Submit a DMCA takedown request.
The next step is to contact Google and file a DMCA Takedown Request. This can take up to two weeks and will result in the article being removed from Google search. It may potentially result in severe fines for the infringing site, so utilize this option as a last resort.
Clean Up Your Website’s Link Profile
A link profile is an SEO phrase that describes the quality of links pointing to your website. Your link profile is still regarded as one of the most essential elements in ranking in Google. Although the impact of low-quality links (spam) on your site has been reduced with the recent Penguin update, if you have a large number of bad links, they may still have a negative impact by prompting a manual review by a Google employee.
This is especially problematic for AdSense or affiliate site owners who may be using “Grey Hat” SEO methods to get their site to rank. As previously said, the Google algorithm is not clever enough to detect all current SEO methods, but a human can.
Keep your link profile “clean” to minimize unnecessary inspection. If you want to dig deeper into your link profile, utilize tools such as Ahrefs, Majestic SEO, SEM Rush, or SEO Moz to assess the health of your links. If you discover that your site contains a large number of spammy links, use the Google Disavow Tool to delete them.
Even if the spammy link does not have a detrimental impact on your Google rankings, it will tamper with your statistics and skew your conversion rate stats by giving the impression that you have a slew of potential consumers who aren’t purchasing your goods, which might be unappealing to a prospective buyer. So, it’s ideal to clean up your link profile so you can acquire the most accurate analytics data and the greatest pricing for your company.
If you rely heavily on SEO and your primary source of traffic is organic search, maintaining a clean link profile is critical to avoiding unwanted attention from Google. Bad links will have less of an impact if you predominantly drive traffic through paid traffic or social media.
Whatever the case, having a clean backlink profile might give a potential buyer more confidence when considering your company as an investment.
Operational Tweaks
Supplier Contracts
If you own an e-commerce firm, supplier contracts can mean the difference between your company being an appealing prospect and a terrible deal. When you sell, your supplier has no relationship with the new owner and may not feel obligated to pay them the same price they offered you.
Get a written agreement with your provider. If you have a particular deal with your supplier that gives you a large margin, now is the time to ensure that the agreement is transferable to a new business owner.
You don’t want to be halfway through the transfer process with a potential buyer just to have them walk out because you couldn’t secure your supplier agreements.
Outsourcing
If you haven’t already started outsourcing or recruiting, this is a good moment to do so.
You should have previously developed SOPs for the most, if not all, of your business processes. You now wish to adjust and automate any other repetitive duties that have been difficult to let go of. Using tools like TimeDoctor.com can be a great eye-opener for the lone wolf entrepreneur. Many entrepreneurs underestimate how much time they devote to the day-to-day operations of their businesses.
If you spend more than 10 hours per week on an activity, such as customer support, consider outsourcing it to free up your time. The time saved allows you to focus on more strategic parts of your organization, such as developing new goods or expanding your customer base.
Be aware that hiring personnel increases your cost base, reducing your net monthly revenue. However, a fully automated business is considerably easier to sell and more appealing to purchasers than one that requires them to spend a significant amount of time managing the business. Some purchasers place a high value on passive income. It’s also easier to scale and grow your business, which can help offset the short loss in net revenue.
Marketing Plan
Nobody knows your business better than you. Providing information on how the firm can be expanded by the next owner demonstrates that you care about its success. A buyer might be interested in incorporating a few ideas or laying the basis for future expansion.
3 Months From Selling Your Business
The home stretch! If you’ve completed all we’ve discussed thus far, the remaining steps should be simple and straightforward.
You do not want to make any substantial changes to the business at this time. Focus on what works and fine-tune what you already have to keep your revenue flowing.
Has anything changed with the SOPs?
You should have already spent enough time developing and improving your SOPs, so this should be straightforward. You want to ensure that any SOPs you have are still applicable to your business.
In the realm of online business, technology advances swiftly, and a lot can change in a year. Consult with your staff – they use the SOP templates on a daily basis and will be able to advise you on any adjustments that are required.
Maybe your marketing postings are no longer published on Instagram, thus you need to revise your social media marketing SOP. Perhaps you received a terrific offer from a new shipping company and need to tweak your procedures to reflect the change. Regardless, your procedures must be updated to ensure that they are still current and that your business continues to operate efficiently under the new owner.
Clear up the terms of service.
Make sure your Terms of Service are up to current.
Maybe you sell an information product that was originally sold as a “pay once for lifetime access” deal, but you have since switched to a monthly pricing model. Perhaps you have a client services firm where you used to do one-time assignments but now only operate on a minimal retainer.
Examine everything and get legal guidance to ensure that everything is right and in order.
Review Financials and Analytics
This portion is simple if you’ve been keeping track of your profit and loss statement or, better yet, using professional accounting software.
You (or your bookkeeper) should be able to provide detailed reports outlining how your firm has performed over the last 12-18 months.
Use this data to determine how your company is performing. If your firm is growing, it is a good sign and will be lot easier to sell than if it is declining. It’s also beneficial for an online store to give a sales breakdown per product.
If you’ve been keeping a traffic log based on your analytics, you should have extensive notes on any dips that appear in your statistics, which you can readily validate and explain if a buyer asks.
Keep in mind that, while your multiple is based on a 12-month average, if your company has been in operation for five years, a buyer will want to view the last five years’ reports. So don’t think that 12 months of reporting will suffice.
Buyers want to observe how the firm is trending year after year. Some purchasers enjoy purchasing distressed or declining businesses, but other investors prefer a positive cash flow generator. So it’s best to be completely clear from the start. Having a customer cancel their offer because you did not provide all relevant information wastes everyone’s time.
Outsource as much as possible.
If you’ve followed this approach thus far, there shouldn’t be much left to outsource. However, some business owners refuse to delegate a work just because they love doing it themselves. However, if you want to make your firm as appealing to as many consumers as possible, try to outsource whatever you can.
Some potential owners may like to run the business from a remote area in another country, such as a beach in Bali. If you have chores that require a physical place, such as fulfillment, you will limit the number of possible purchasers. Look into third-party warehouses or businesses that can manage this activity for you.
30 Days Out From Selling Your Business
Here’s what you’ve been working so hard for: your company is finally ready for launch. You applied the average net monthly profit over the last 12 months to the sale price calculation we provided earlier. You’ve got your finances in order and plenty of analytics to back up your traffic sources. So what happens now?
The final 30 days are spent preparing the business and the required documentation so that potential buyers can conduct their own due diligence, and then deciding how you will sell your business.
Private sale or broker? — Which to Choose
You can sell your online business in two ways: privately or through a broker. Both alternatives have advantages and disadvantages, so let’s start with the private sale.
Private Sale
A private sale is rather self-explanatory. You are in charge of locating purchasers, transferring data, and negotiating the entire deal. However, if you are a skilled negotiator and have prior expertise with flipping sites, you may be able to save money by bypassing a brokerage fee.
However, there are certain drawbacks to selling your firm privately, including:
- Buyer Reach: Most business owners do not have a contact list full of potential purchasers. Going private means you will most likely spend a lot of time on the ground or on the phone looking for and contacting potential purchasers, which means the sale process will take much longer. Not ideal if you need to sell quickly.
- Qualified Buyers: When selling privately, you may encounter a large number of tire kickers and people who will attempt to undercut your price. If you choose the private sale approach, you will need to devise a process to quickly sift out these people. If you choose a competent broker, they will handle this for you.
- Negotiations: A private sale is ideal if you are a) a skilled negotiator and b) experienced with selling websites. Most people aren’t, either. Negotiation can be difficult, and purchasers are likely to have more expertise buying businesses than you do selling them. This puts you at a disadvantage.
- Migrations: Handing over your business is rarely an easy process. It’s simple to overlook something and spend months attempting to fix it, making the process stressful for both you and the buyer. A reputable broker will handle the majority of the work and guide you through the rest.
If you choose the private path, one piece of advice is to look into strategic purchasers. These are the other firms that can profit from purchasing your brand. An example would be a health and wellness authority website that earned a lot of affiliate revenue. This business could be a fantastic method for a supplement company (with some adjustment) to create extra cash while also cross-promoting its physical items.
However, it is not a good idea to sell to a direct competitor. Because you must provide them with all of your business information (supplier contracts, sales figures, SEO keywords), they may exploit the vetting process to obtain access to your supplier, poach your team, or reverse engineer your goods or processes.
Using a Broker
An online business broker is someone who helps people acquire and sell internet enterprises. The main reason people prefer to hire a broker is that they only need to provide the required information about the business sale once, and the broker will handle the rest. In a private sale, you’ll have to spend a lot more effort keeping track of which buyer received what information. A broker handles this process for you.
Brokers generally have a pool of pre-qualified and occasionally repeat customers at their disposal, making it considerably easier to sell the company. They have mechanisms in place to make the entire process simple for both buyers and sellers. Good brokers are also experienced in selling your unique type of web business. While competent brokers charge more, you may be able to make more money in the long run by utilizing their negotiation abilities, tapping into their existing buyer network, and selling your firm faster.
However, there are drawbacks as well:
- Because the market is still relatively new, it can be difficult to find reputable, experienced brokers.
- Buyer careful; there are fly-by-night operations wanting to make a fast cash.
- Good brokers charge a high commission (full disclosure: CasinosBroker charges commission on all sales).
Naturally, we at CasinosBroker are a little prejudiced, but the results speak for themselves.
Submit Your Business for Vetting
If you’ve decided to employ an internet business broker, this is the stage where you pass them all essential papers so they can begin vetting your company.
Some of the documentation you’ll need to provide:
- Traffic data from the analytics you set up at the start (such as Google Analytics or Clicky).
- Proof of revenue/earnings (reports from accounting software or profit and loss spreadsheets).
- Proof of ownership for applicable domains/brands/trademarks, etc.
The broker will review the information provided and ensure that everything is in order. They will look into your finances, analytics, how much income the business generates, and how it is trending, among other things.
This process can take two to four weeks, depending on the size and complexity of your organization. This occurs before the broker engages in any marketing. While it takes some time, the procedure is vital since it helps the broker to create effective marketing materials to sell your business quickly and for the greatest price, so be patient.
Set a Hard Minimum Sale Price!
The higher the price of your web business, the longer the talks will last. It is critical that you establish a firm minimum sale price or a price that you will not accept less than.
When you’re in the midst of long-term discussions, it’s incredibly tempting to cut your prices. Setting this limit can enable you (in the case of a private sale) or the broker choose what types of offers to bring to the table and which should be rejected outright. This prevents you and the customer from wasting each other’s time.
Some Final Tips Before Selling Your Business
If you’ve gotten this far, you’re either selling privately and reaching out to possible buyers, or you’ve gone through the vetting process with a broker and your business is posted on their website.
Even if you are not selling and have just followed the advice in this article, you are now lightyears ahead of other business owners who haven’t considered any of this yet.
But we’re not done. Before you leave, here’s one last tip.
How Talking About Your Failures Can Make Your Business Worth More
Doesn’t it seem counterintuitive? However, our experience has shown that discussing a company’s potential and predicted growth can result in a lower offer than you think.
Why?
Because when selling its “potential” value, most astute purchasers would make an offer that includes an earnout or “bonus” to be paid after the stated benchmarks are attained. This implies that if it fails to meet the targets you set, you will lose a significant amount of money.
Understand that some purchasers enjoy purchasing distressed, underperforming, or poorly managed enterprises. When you discuss what you’ve done wrong or where you’ve failed to put in the effort, this type of buyer sees a chance to fix things, improve things, and leave their imprint on the firm. These “quick wins” enable them to bring immediate value to the firm and help them see it as a bargain investment.
For example, suppose your entire business model relies on purchased traffic funnels to generate money. You show a potential buyer your average, barely optimized ad campaigns and explain that this is one area where you haven’t done particularly well. A buyer who is an expert in paid advertising can detect rapid efficiencies that could quadruple the company’s revenue.
Keep this in mind throughout negotiations: speaking the buyer’s language can impact how much you can sell your firm for.
What’s Next?
Selling your online business is a serious decision that should not be taken lightly. Especially if you’ve spent years of blood, sweat, and tears constructing it.
Use our free appraisal tool to estimate your potential sale price.
However, consider how life-changing it would be if you sold your firm for five, six, or even seven figures. Following the procedures outlined in this guide will prepare you for the big escape, if you want to take it.
To sell your online business, submit it to our experts for verification. It costs nothing to submit and is risk-free; you continue to profit from your business while we market it for you.
Even if you don’t decide to sell, the knowledge presented above will assist you in developing, systemizing, and automating your firm. One that is a lean, mean money-making machine—one that generates possibilities and allows you to live the life you desire.
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