Tips for Selling an e-Commerce Business
Retail sales from e-Commerce businesses have increased dramatically in recent years. While the industry was already on the rise before 2020, the advent of the COVID-19 pandemic pushed even more sales online, emphasizing the overall impact of the industry.
In 2021, e-Commerce sales totaled roughly $768 billion. By 2025, that total is expected to increase all the way to $1.33 trillion.
With such an emphasis on online retail sales, new e-Commerce businesses are popping up every day. This has not only changed the landscape of retail, but also on the sale of online businesses themselves.
If you have a successful online e-Commerce business that you’re looking to sell, follow these tips to maximize your company’s value.
Provide In-Depth Data Analytics
Data analytics is a huge part of running a successful e-Commerce business. Data helps drive business segments such as marketing, sales and even product and service development.
Potential buyers will want to see these data analytics, and they’ll want to be able to take a deep dive into them. Providing stats such as web traffic, social media followers and overall sales won’t suffice for today’s e-commerce business buyers.
Instead, they’ll want to understand where your web traffic comes from and how you acquire web visitors and customers, including how much you spend to acquire these customers.
Understand that some data analytics serve as the building blocks of an e-commerce business’ valuation. And when you provide this data to potential buyers, make sure that it comes from a reputable analytics platform such as Google Analytics.
Get Your Finances in Order
Running an e-commerce business is the same as running a brick-and-mortar retail business in regards to finances. Buyers will desire to see standard financial reporting for your e-commerce business, just as they would if you owned a retail store.
You should have detailed P&L reports and other financial statements that show your gross sales, your net profit, your cost of goods sold and other general accounting figures. Your financial data should be organized neatly in spreadsheets and displayed in an easy-to-view manner.
Luckily, there are many online accounting platforms that allow you to connect your e-commerce back-end directly to their software so much of this information can be generated automatically. For a small expense, you could significantly decrease the work involved in organizing your finances while putting your business in the best position to sell.
Create Standard Operating Procedures
The businesses that are the most attractive to potential buyers are the ones that have established Standard Operating Procedures, or SOPs, in place. These SOPs essentially serve as instruction manuals that detail how each of the tasks related to running your business should be performed.
These SOPs are good for a number of reasons. From a selling standpoint, it helps a prospective buyer easily take over your e-commerce business after the sale is final. This provides them with a turn-key business they can continue to run while they figure out the specific direction they want to take with it.
In addition, having SOPs in place will allow you to run your e-commerce business more effectively while you still have control. In essence, there’s a dual benefit to creating SOPs for your e-commerce business.
They will first increase your efficiency and overall production while you own the business, and then will increase the value of your business when you go to sell it.
Most e-commerce businesses will rely on various contracts to run on a day-to-day basis. This could include contracts with vendors that provide basic supplies for products to employees and/or 1099 contractors who work for you in some fashion.
If you’re looking to sell your e-commerce business, prospective buyers will want to see all of these contracts so they can analyze all the costs associated with running it.
In addition, it’s a good idea to formalize any of your supplier and employee contracts before you list your business for sale. This will help make things easier for the next owner to take over. In addition, it could lock in prices and arrangements with all the people who help your business run as smoothly as it does.
Once you enter advanced stages of negotiation on a sale, it might be a good idea to notify your vendors, suppliers and employees of a possible pending sale. This would help make the transition smoother for everyone as well.
Maximize Your Output
Remember that no sale is final until everything is signed, sealed and delivered. That means you need to continue to operate your business as you always have until the contract is finalized.
In essence, you want to try to maximize the output of your e-commerce business even while you’re in active negotiations to sell it. This will accomplish a number of things.
First, it’ll engender confidence and trust in a potential buyer. As they see that your business is continuing to crank out sales and be productive, they’ll be more confident in its future possibilities.
Second, it will increase the valuation of your business. As you sell more, the value of the business will increase.
Third, it’ll bring you more money. Remember that every dime you sell before the sale is finalized is yours to keep. So, essentially, by maximizing your output, you’ll be improving your current financial situation.
And finally, doing so will serve as an insurance policy in case the negotiations fall apart. If this happens, you’ll have a business that’s bringing in more money now and will be valued much higher later when you try to sell it again.
Our best advice? Don’t waste another day and talk to a Sunbelt South Florida broker today!
Sunbelt Business Brokers of West Palm Beach provides dedicated business brokerage services for all of your selling needs. Whether you are an established business owner nearing retirement and looking to sell, or an ambitious entrepreneur seeking your next investment opportunity, there is no reason to look beyond Sunbelt Business Brokers. Visit us at 800 Village Square Crossing
Suite 216 Palm Beach Gardens, FL 33410 or contact us at (561) 832-9222.