You’ve built an eCommerce website with high revenues after putting in innumerable hours of hard work. And now you want to get the highest possible return on your venture. If you are looking for ways to prepare for the sale of your website, you have come to the right place. We are going to discuss the factors you should consider to get the maximum possible value for your website.
The Business Worth
There are various metrics that can affect the value when you want to sell an eCommerce website. The usual determining factors are:
- Volume of sale
- Revenue generated
- Revenue dispersion among products
- The principle cost
- Marketing costs
- Capital received in previous deals
E-commerce websites need a more elaborate valuation in comparison to other businesses since there are more types of costs associated with the business operation. Some of these costs are:
- Wholesale costs
- Processing fees
- Shipping costs
- Marketing costs
- Server costs
- Employee salaries
The combination of these factors makes selling an eCommerce business a bit more complex than businesses of other industries. On the plus side, eCommerce websites tend to have many buyers ready to invest. E-commerce websites often yield a faster ROI, which is why investors prefer to invest in eCommerce businesses.
Hiring a professional broker can help you with a proper valuation of your company by a detailed analysis of the different features of your business. They will also help you to choose the right buyer and avoid the bogus ones. But beware of brokers that present an unrealistic valuation of your business. These brokers use unrealistic figures to lure sellers to sign up for long-term agreements. These agreements often have a “ready willing and able” clause which can cost you thousands of dollars as commission even if you decline an offer.
The business worth of an eCommerce website can be increased by adding certain features such as:
- Site age by 1-2 years
- Expected sales key drivers
- The steady growth of revenue
- Higher repeat customers
- Assorted traffic
- Stable profit margins
- Traffic stats with a long history
- Streamlined operations
- Professional team
- CRM and sales software
- Relationship with stakeholders
The best suited time would be determined by your objectives and the status of your business. If you feel that you are ready to sell your eCommerce business to the highest bidder, you should plan your time to sell the business carefully. Numerous factors can help you determine the right time to put your business for sale.
Ecommerce websites that can fetch the highest valuation meet the criteria that we discussed above. You should consult with a business broker as soon as you decide to sell your eCommerce business to get valuable insight into increasing its value. Even the activity of planning to sell your business might give your ideas to improve the performance in various sections that can cumulate up to higher sales and profits.
It is best to avoid selling the business right after the high season of sales is over. The business would fetch higher value before the start or during the period of high sales since buyers would be assured of higher revenue. Selling during this period might also fetch a buyer sooner than in other periods.
The amount of time it can take to sell your business varies depending on the strengths of the business, the situation of the market, and the terms of the deal. Larger deals can take longer to sell, sometimes up to a few months while smaller deals can get sold within a few weeks. The more complex the business is, the higher the due diligence will be.
What to Avoid?
There can be a few factors that might put a potential buyer off the deal and must be avoided. Some of these are:
- The wrong business niches
- Data discrepancy
- Problem with the website
- Unfavorable products
- Bad branding or product conditions
You must understand that there is a lot of planning that goes into the transition of the business after the sale is concluded. The transition process consists of several steps to transfer the ownership of your business. These steps are to ensure that the new owners assume the new management positions in a seamless manner and continue with the operations. You would probably have an important role to play in the entire transition. However, this can be ascertained before the deal if you are willing to train the new customers.
In case you have hired a broker, it will be wise to tell the broker to put the transition process in detail in the sales documentation. In case the buyer is new to the business and has no idea about the day-to-day operations, this can be a great selling proposition for your business.
Your broker would ensure that the buyer feels comfortable during the progression of the deal. They would make sure that the buyer stays happy with the details of the business and during the transition so that they don’t pull out of the deal.