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Selling a business is no easy feat, especially if it’s an online business. If you’re looking for a buyer but don’t know how to sell your business, don’t worry. We’ve got you covered. In this comprehensive article, we take you through the various stages of selling an online business and explain how you can go through those stages. These include determining the reason for selling the business, collecting all your data and numbers, evaluating your business, searching for buyers, making the sales pitch, negotiating, closing, and handing the business over. Without further ado, let’s get started.
Before you take any step, ask yourself why you are selling your business. Below are a few reasons we’ve highlighted. You might identify with one or more reasons:
Whatever the reason, have a clear understanding of it. If the last point is challenging for you, it will be difficult to sell the business, but not impossible. In the upcoming sections, we’ll explain how.
Once you decide to sell your company, start the collection process. You’ll be collecting and analyzing data and collating all important documents. This includes collecting data on your revenue, expenses, and more. It also involves preparing bank statements and tax return documents of the recent past (At least 3 to 4 years) and getting them reviewed by an accountant. Make a list of what and all will be going with the business. These can be:
Once you clearly understand your numbers and what you want to sell, you move on to the evaluation stage.
Evaluation is a complex and extensive stage requiring you to assess multiple variables, but let us help you simplify. Here’s a quick list of things you must look at, assess, or ask yourself while evaluating your business.
Once you have accounted for all this, you can use several formulae to evaluate the big number. One of the ways is to find the product of your average net profit (yearly/month) and a multiplier. This multiplier can be any number based on the factors above. The better the business is doing and the stronger the promise of growth, the higher your multiplier can be.
After arriving at the big number, determine the pricing window. A pricing window is a period after which the price may change. Ideally, your pricing window must be at least a year if you’re a small to medium business. This way, you promise your valuation number won’t change during this period. The pricing window assures the buyer that the business is stable.
Once you’ve completed the valuation, you must create a roadmap. This roadmap would end with you putting your business for sale. Hence you must plan for 12 months in advance.
Keep a plan with milestones for 12 months before, 6 months before, 3 months before, 1 week before, and the D-day! Between each milestone, set a goal for the tasks you will complete. Once you’ve set them, get started!
Once you meet with the buyer, your pitch will start. In this stage, you’ll take the buyers through your company's revenue model, the profits it has made, and the opportunities for growth, and highlight how the buyer will benefit from buying the company. In the end, showcase your evaluation and mention how you’ve tried to vet the evaluation using different tools and services and why you think this is the perfect number for the business.
A few things to remember are:
This is perhaps the most difficult stage during the pitch. While negotiating, listen to the buyer and understand their origin. Try to read between the lines to understand their motive behind the counteroffer.
Stay confident about your numbers and know that if the buyer engages with you for a long, they see potential in the business, and that’s why they have reached the negotiation stage. So, remember your minimum number, as mentioned in the previous section, and negotiate accordingly.
In this process, you close the deal and sell your business. Before you close, check all the terms and conditions, the contracts, payment terms, and formal documents to ensure no issues afterward. Finally, the handover stage is when you transfer the business completely to the buyer. With these, you have successfully sold your business.
Now that you know how to sell a business, there’s one part that we should discuss. What questions will the buyers ask, and how can one reply? Let’s find out.
This is to understand if everything is good with the business and the motive behind the sale. So keep things as transparent as possible while throwing a positive light on the business.
Mention your company’s evaluation and sound confident when you do so. More often than not, there’s a moment of silence after the numbers are mentioned, but it’s alright. Let it sink in before you move to the next question or the next point of the topic.
Discuss your evaluation method, as different companies evaluate differently. Also, mention the services or tools you’ve used in the evaluation process and how you arrived at the number.
This is to understand the revenue, sales channels, expenses, and profits. Buyers will also want to know if the company is in debt. So, talk about the current state of things and then drive the conversation toward growth opportunities.
Often buyers will ask this question. So elucidate the different ways and facets in which the company can grow. Give a glimpse of the growth plans you made during the preparation stage. Elaborate but pre-empt questions that they might have and let the buyers ask them. It would show you’re not in a rush and have prepared everything well.
This is an important question that you’ll need to answer well. Talk about your management’s skill sets and the value they have provided to the company. Also, mention how they will be valuable in the future too.
List what you’ll be selling when you sell the company.
If your online business requires any compliance or licenses, mention them when asked this.
Do not get defensive while talking about your competition. Highlight the competitors and your business’s pros and cons objectively.
You can cover this while talking about the company's financial health, but elaborate more on this when asked this question.
This is an important question that indicates if you have thought everything through. So, give the number.
Usually, people trust old companies relatively more because it shows that the old company has managed to stay healthy even after several ups and downs.
You can discuss the selling price and the various terms, including the advance, the duration between each payment, the modes, and more.
This is to understand the kind of relationship you have with the customer. how they might feel after a company is acquired, what the brand loyalty is.
This is to understand whether the staff has been happy with the company.
You must answer these important questions with honesty, transparency, and, most importantly, tact. Before we wrap up, let’s look at a few websites to enlist your online business.
With 20+ years in eCommerce and a proven history of scaling a 7-figure business, I know how to transform challenges into opportunities for growth. As the former Head of E-commerce for a European food tech company, I managed 14 e-shops across Europe and South Africa. Now, I specialise in helping professionals like you unlock the potential of AI automation for your business.
Over 1,800 students have already enrolled in my online courses to master these skills. Whether you’re looking for hands-on AI automation services or want to upskill with my courses, I’m here to help. Connect with me on LinkedIn to discuss your needs or join my programs to start building smarter, more scalable systems today!
Discover the top 30 ecommerce and online entrepreneurs along with their net worth and sources of income in this revealing list.