How to Sell an Ecommerce Business for Maximum Profit

You’ve launched an online business, scaled it and seen some good returns. Congrats!

But while launching and scaling an online store can seem like the hardest bit, there are multiple mistakes you need to avoid when selling your store, including selling at the wrong time and not prepping it correctly. 

This is especially true for entrepreneurs who’ve never sold an online store before. If you fall into this category, the good news is that there are plenty of buyers out there who are looking to take over your store and take it to the next level, with global online sales expected to hit the $7.4 trillion mark by 2025. Online shopping has never been more in demand. 

The bad news is that selling an online store requires a lot of work. You have to make sure it’s the right time to sell, you have to prime your store so that you bump up its value and make it appealing to buyers – and you also have to find buyers who are genuinely interested. 

The purpose of this article is two things. First, we’ll be showing you exactly how to get your store ready for the selling market. Secondly, we’ll show you how you can sell an Ecommerce business for maximum profit. 

Sounds good? 

Let’s start. 

Steps to Start Selling Your Ecommerce Business 

Before you can put your online store on the market, it’s important that you prepare it for sale. This will ensure you get the best possible price for it (and a price you deserve after years of hard work). 

Prepare Your Site for the Sale

If you don’t properly prepare your online business before you sell it, you simply won’t get a good price for it. 

Preparing your site for a sale requires you to organize your financials and customer data, establish your SOPs, as well as update your inventory.

We’ll be taking a look at each of these one-by-one in this section. But firstly, one of the things many first-time Ecommerce sellers overlook is Ecommerce automation.

Automation in Ecommerce is when you use software and tools to automate aspects of your business so that it can run smoothly without you even being there.

Why is this useful? 

Think about it: If someone is buying your store, they might not necessarily be interested in assuming the role of a full-time job. They want to be able to take over a store that allows them to take a hands-off role.

If your store can’t function without you being there 24/7, it will lose some of its value. If, on the other hand, your business only requires you to be there for, say, less than 10 hours a week, you’ll secure a premium multiple, which will help to bump up the price of your store (more on multiples soon). 

Things you can automate include: 

  • Inventory levels (inventory management)
  • Fulfillment 
  • Marketing 
  • Advertising 
  • Customer service 
  • Website development 

All of the above are time-consuming tasks. When you automate them, you’ll save yourself a huge amount of time while improving your store’s attraction to potential buyers. 

Update Your Inventory 

Before you put your online business up for sale, it’s critical that your inventory is on-track. This means:

  • Managing your inventory 
  • Having the right products available when they’re needed
  • Avoiding an overstock and an understock
  • Fine-tuning your fulfillment so that orders are delivered on time 

To help you update your inventory so that it’s ready for sale, it’s a smart idea to invest in inventory management software. This will help you to perform an inventory audit, assess your supplier performance, and generally stay on top of your stock so that it’s at the optimum level. This alone will help to bump up the price of your store. 

Then, make sure to remove products from your website that you’re no longer selling and consider reducing the amount of categories if you feel that there are too many. 

Establishing SOPs

SOPs (or Standard Operating Procedures) are guides that help your staff perform their tasks to the best of their abilities, as well as in such a way that’s efficient and productive, and for the benefit of your overall operations. 

When you establish SOPs, you’re essentially detailing steps and procedures that will make life far easier for the next owner. They won’t have to establish SOPs themselves, and they won’t have to take over a team that’s fumbling around in the dark. Instead, everyone will know what needs to be done, as well as how to do it. 

Not just that but SOPs can enhance your reputation, demonstrating that you’re a reliable brand that’s committed to efficiency and consistency. 

What areas of your business should you create SOPs for? 

  • Inventory management: This SOP needs to establish guidelines and procedures for, among other things, receiving, storing and shipping supplies. In many cases, the business will maintain vendors and partnerships. If you have a reliable 3PL partner, highlight their success rates with fulfillment and order accuracy so potential buyers feel comfortable with the SOP and see that you’re working to minimize any disruption.
  • Customer service: This SOP should establish a framework that ensures your team is able to efficiently deal with customer queries across all channels in a timely manner, directing them to the right agent when necessary. 
  • HR management: This SOP should establish the policies and procedures for areas such as recruitment, performance appraisal, onboarding and offboarding of new hires, as well as overall employee management. 

When you write up your SOPs, don’t forget to keep everything simple and clear so that your guidelines are easy for everyone to understand, and make sure that your format is consistent. This will further improve readability. 

Organize Your Financials

If there’s one aspect of your business that can seriously hamper your prospects of achieving a sale you’re happy with, it’s disorganized financials. 

Disorganized financials means you don’t truly understand the financial position of your Ecommerce store. And if you don’t understand it, a prospective buyer won’t have a grasp on your relative growth in net income, the relative size of your business and its prospects of scaling. As such, you simply won’t get the price you’re looking for. 

Before you put your store up for sale, it’s essential that you sort out your finances. While we recommend that you use software like QuickBooks to help you prep your financial statements, as well as get a firmer grip on your projections, we also advise you to work with an independent auditor who can tell you more about the financial health of your business. 

Organize Customer Data 

Customer data has been a big topic for a while now. Ecommerce businesses are just like any other type of online business in that they collect large amounts of information on their customers, which is typically used to enhance the customer experience and grow the store. 

And because a) there’s so much data and b) it’s so crucial to the success of your business, it’s important to get on top of it. 

Not just that, but getting your customer data organized will help to make your Ecommerce business more appealing to potential buyers. They’ll be able to take over your business and continue your marketing campaigns without starting again from scratch. 

To help you better organize your customer data, here are some ideas: 

  • Organize your data into different segments, such as marketing, sales, and customer service. 
  • Only collect relevant data. This might include customer names and important metrics like website engagement, customer lifetime value, and churn. 
  • Remove any irrelevant data. You don’t need every single piece of customer data. Keep the data that helps with forecasting but make sure to discard superfluous data that doesn’t help with targeting. This will mean you have less data to protect, which helps to keep security costs down. Irrelevant data might be old data that’s no longer needed, as well as any data that you’ve assessed is simply not needed to help you achieve your goals. 

Focus on Sales and Traffic 

It figures that the more sales you generate, the more valuable your Ecommerce businesses will be. 

The idea is that you as a business owner are able to demonstrate to potential buyers that you have a clear growth trajectory that will allow the next person to come along and continue what you’re doing in terms of finding potential customers. This means they’ll be able to keep generating traffic from the same sources as you and continue clinching sales. As such, your store will be worth more when it comes time to sell it. 

Sales and traffic largely go hand-in-hand. Ergo, the more you’re able to drive consistent, qualified traffic to your online store, the more sales you’ll land.

It all comes down to your marketing and advertising channels. This will determine your position on Google, which is essential for organic traffic, as well as your ability to reach customers via channels like email and social media. 

Before you put your store up for sale, then, make sure you’ve covered the bases when it comes to:

  • SEO
  • Social media marketing
  • Email marketing 
  • PPC marketing 

This will help you to show clear and consistent avenues of traffic, both organic and paid, that will assist the new owner when it comes to making more sales. 

A prospective buyer will likely ask you questions about your marketing strategies and your traffic sources. This is why it’s crucial that you closely monitor your web traffic data, looking out for trends, traffic sources and general growth sources. You need to gain a deeper understanding of metrics like conversions, pagers per session, and bounce rate so that you understand your traffic better. 

Also, if you take a look at your traffic data and realize that your site isn’t growing in authority right now, or there are no positive trends, it might be too soon to put your store up for sale. 

Make sure to maintain historical data on your web traffic, too. Tools like Google Analytics can help with this. 

To help you win in each of the above areas and create awesome marketing campaigns, here are some general tips:

  • Decide on a marketing budget 
  • Produce valuable content that educates your audience about your products and niche
  • Host live Q&A sessions on social media
  • Create how-to videos that demonstrate how your products work 
  • Carry out keyword research and optimize your content with them 
  • Ensure that your marketing is always customer-centric 
  • Adopt personalization so that your content is tailored to specific customer segments

Valuation 

Lastly, before you move onto the sales process, it’s time to value your Ecommerce store.

This can often be the hardest step because you don’t want to price your store incorrectly so that buyers are put off. Neither do you want to price it incorrectly so that you are left short-changed.

The positive news is that, provided you’ve implemented the strategies we’ve just outlined above, you should at least arrive at a price that reflects your years of hard work so far. 

Most online store owners use the “multiple of seller discretionary earnings” method to value their store. This is when you take the net profit of your business over the last 12 months, before applying a multiplier.

This multiple depends on the size, age, and growth trajectory of your business and typically ranges between 1.5 and 3.5. 

Once you’ve applied the multiplier, you will have arrived at a fair valuation of your Ecommerce business. 

Here’s an example: Over the last 12 months, an online store has had $100,000 in net profit. Due to its age (3+ years), financial health, and growth trajectory, it has a 2.75 multiple that we can apply.

Once applied, we find that this store is worth $275,000. 

That all said, because valuing an online store is a thorny challenge for first-time sellers, it might be a good idea to work alongside a broker. 

The Sales Process 

Now that you’ve prepared your business for sale and worked out its valuation, the next step is to enter the sales process.

In this section, we’ll be showing you how to:

  • Do your due diligence 
  • Find a buyer
  • Qualify buyers
  • Negotiate a deal
  • Transfer ownership 

Due Diligence 

Due diligence is paramount when it comes to the buying and selling process of an online store. It’s naturally more important for a buyer because they’re the ones who are taking a risk by purchasing your store. As such, they will have questions to ask you about things like your:

  • Customer service 
  • Inventory management 
  • Supplier relations 
  • Traffic
  • Revenue

To ensure you a) get the right price for your business and b) you manage to get a sale over the line, don’t enter into negotiations until you understand your business inside out. 

This means you’ll need to be intimate with absolutely everything about your store, from your content marketing campaigns to your fulfillment. 

Finding a Buyer

Selling your online store for the first time is incredibly challenging – and it’s even more challenging if you can’t raise awareness that your store is even for sale. First, you need to understand what buyers are looking for, then you need to find the buyers.

This is indeed an obstacle because, while there are prospective buyers out there who are looking to purchase online stores, they won’t know that yours is available unless you manage to approach the market. 

This is one of the biggest benefits of selling on Flippa. Flippa has the largest pool of buyers looking for digital assets in the world. So you’ve come to the right place.

There are two ways you can sell on Flippa:

Brokers have access to networks of prospective buyers. They’ve also sold businesses just like yours before, and they know how to get a deal over the line. Brokers typically work on commission, and as well as helping you find a buyer they will also help you value your business

You can also leverage your existing connections. It’s not, however, recommended that you spread the word on social media, as this can catch the attention of your customers. 

Qualify Prospective Buyers

Lots of people might put bids in for your business but not all of them will be qualified prospective buyers. 

What do qualified potential buyers look like? 

  • A qualified buyer has the right budget to be able to purchase your store
  • A qualified buyer has the authority to make a bid for your store
  • A qualified buyer working towards the same timeline as you

In order to qualify potential buyers, you don’t have to actually do too much work. In fact, you can qualify buyers by asking a series of questions: 

  • What budget are you working with?
  • How do you intend to pay for my business?
  • What sort of timeline do you have in mind?
  • What kind of features do you want to see in an Ecommerce store?
  • Are you the key decision maker?

By asking these questions, you’ll eliminate any time wasters and move forward to the negotiations stage as fast as possible because you will know what buyers are looking for in online businesses.

Negotiating a Deal

All deals can be negotiated. 

If you get a good deal? It can still be negotiated.

And if you get a bad deal, you owe it to yourself to negotiate.

It’s highly likely that an opening offer will be underwhelming. But that’s fine – it’s time to negotiate. What’s important to understand at this stage is that a potential buyer isn’t coming from the same place as you are. As such, there’ll be a few discrepancies. 

The negotiation stage can be tricky. Here are some tips: 

  • Don’t start negotiations until you’ve fully researched the buyer 
  • Even after you’ve valued your business, make sure you head into the negotiation process with a set price limit. In other words, a price you absolutely won’t go beyond
  • Be prepared to compromise. The buyer might give something up in the negotiation process – what will you give up?
  • Understand the marketplace. This will help you see things from the buyer’s point of view, which can be helpful when negotiating a deal
  • Reserve the right to say No

Transferring Ownership

This is the last step that’s just as crucial to get right as all the steps that preceded it. It’s the last piece of the puzzle and it’s natural to feel a few nerves as you count down to the last day. 

To ensure the transition goes as smoothly as possible, you need to leave no stone unchecked. You also need to be organized and have all the right documentation ready to hand over to the new owner. 

Things you’ll need to transfer include: 

  • Passwords
  • Domains and access to your hosting account. If you use an online marketplace like Shopify, you’ll need to adjust your store settings accordingly
  • Useful documents, such as a list of all the accounts you use to run your Ecommerce business 
  • Access to said accounts 
  • Files related to your business and your website 
  • Financial records
  • Customer data
  • Branding, such as images and other graphics 
  • Payment processors 

You might also come to an agreement with your buyer whereby you stay on for a fixed period of time once the sale is complete in order to help them adjust to your business. 

Selling Your Ecommerce Business – Conclusion

With over 9 million online stores in operation around the world, it’s no secret that the Ecommerce industry represents big business right now. For entrepreneurs, running an online store is one of the best ways to scale a business and make a profit. As such, there’s no better time than the present to sell your store if you’ve decided it’s ready. 

After all, when you sell an Ecommerce business, there’s a lot of work to be done. It all starts with preparing your online business for sale so that it’s attractive to potential buyers, before putting it onto the market, singling out qualified buyers, and – lastly – transferring ownership. 

The process can be arduous and for first-time sellers, it can even be a long-drawn-out process. That is why it’s essential that you a) plan ahead of time so that you can get everything together before you start to consider offers and b) consider working with experienced professionals, such as brokers who can help you value your business and find buyers.

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