How to Sell Your Shopify Business
Shopify businesses are in their prime as eCommerce ventures built on a known, trusted platform. The COVID-19 pandemic has only made eCommerce businesses in general — including those built on the Shopify platform — more relevant and viable.
As quoted on Forbes.com, Adobe predicts that global eCommerce sales will reach $4.2 trillion by the end of 2021, an acceleration that’s largely due to the forces of the pandemic pushing consumers towards online retail. Shopify has earned $2.1 billion in revenue and has claimed a gross merchandise volume (GMV) of $400 billion by the third quarter of 2021. According to Statista data quoted by Sleeknote, Shopify holds nearly 11% of the total eCommerce market share.
The bottom line: Shopify businesses are in very high demand, and the trend is only expected to get bigger.
The bottom line: Shopify businesses are in very high demand, and the trend is only expected to get bigger.
If you want to know much your Shopify business is worth, and how to sell it, there is a proven path. Selling your Shopify store entails understanding its value, preparing for the sale, and going through the right channels to complete a secure transaction.
However, it’s worth talking to a broker who can help you maximize your Shopify store value ahead of time so that you get the highest return possible.
Valuation Metrics For Shopify Businesses
To learn if you can sell your Shopify store for a good profit, you should understand the metrics that matter to buyers. An experienced broker can help you fully assess your Shopify business along these lines while guiding you on adjustments that will increase your asking price.
EBITDA And SDE As Valuation Methods
The two most common methods for valuing an online business are earnings before interest, taxes, depreciation, and amortization (EBITDA), and seller’s discretionary earnings (SDE). Multiples of each balance may be used to determine a range of values for your business.
As the name implies, with EBITDA, some expenses are added back to the total earnings of a business. The longer your Shopify store has been operating profitably, and you can show a favorable growth in earnings over time, the higher an EBITDA multiple you can likely sell it for.
The formula for SDE is:
(Pre-tax, pre-interest earnings) + (vehicles, travel, other transactions listed as business expenses) = SDE
SDE adds back business expenses with some personal advantage to the owner, such as your salary or charitable contributions. Using this method can give solopreneur buyers a sense of what their income will be if they replace you as the owner of the business.
Long-Term Growth Potential
Some Shopify verticals perform better than others. For example, according to PageFly Academy, health and beauty, jewelry, and women’s clothing are three of the highest performing eCommerce niches in terms of sales.
If your Shopify store is in a popular and in-demand vertical and has a track record of loyal customers and growing brand presence, it benefits you greatly as a seller. Buyers may see your Shopify businesses as having a long-term potential for growth.
If your Shopify store is in a popular and in-demand vertical and has a track record of loyal customers and growing brand presence, it benefits you greatly as a seller. Buyers may see your Shopify businesses as having a long-term potential for growth.
Strategic business buyers (especially those who think like value investors) give a lot of weight to the ongoing profit potential, as well as the fact that your store may become more marketable than others.
Established Brand Presence
As noted by Forbes, a strong brand “gives your company a unique personality, and establishes a differentiated position in the market that attracts the right customers.”
A Shopify store with a strong brand has the ability to attract more customers with less heavy lifting. That’s because it will likely come with a growing social media presence and satisfied customers who consistently leave great reviews for your store. This will naturally attract even more customers in the long run.
The stronger you can prove your Shopify brand to be, the better position you’ll be in when it’s time to sell the business.
Operational Efficiency
Your day-to-day business operations matter. Buyers will want to know what it takes for you to keep your business running.
As you prepare to sell your Shopify store, take inventory of the financial state of your business and do what you can to reduce inefficiencies. This will make your business more attractive when placed on the market.
Preparing To Sell Your Shopify Store
Several aspects of a business may need to be tidied up, and assets need to be gathered, before turning over ownership.
Prepare Financials And P&L
The most immediate question in valuing your Shopify store is, “how much money are you making?” Your financial statements, including your Profit and Loss statement, will provide a clear indication of this.
A good Profit and Loss statement details business income, operating expenses, and cost of goods sold.
Reduce Overhead
If there are overhead costs associated with running your Shopify business, such as major office appliances and rent, reducing or eliminating as many of them as possible can enhance your selling position.
However, it’s important to make sure you do not sacrifice operational efficiency for the sake of reducing reasonable business costs.
Gather Analytics And Traffic Reports
Your Shopify analytics report will show a breakdown of where your web visitors and customers are coming from, as well as their behavior on your site. It will also provide data on transactions over time.
Buyers will want to see a healthy volume of new and recurring customers. Preparing these reports several months in advance, while doing what you can to increase traffic, will put you in a better position.
Offer Support
Reassuring buyers that you will be around to help them transition into the ownership of your store (for a few weeks at minimum, to a few months) can be a major selling point. This reduces fears on their end that unexpected issues and complications will arise and helps create a smooth passage as they take over operations.
There are several places online where buyers are specifically looking for high-performing Shopify stores to acquire.
Finding A Buyer For Your Shopify Business
You have several options when it comes to putting your Shopify store in front of buyers:
Private Sale
If you already know potential buyers or can tap into a network, you may find willing prospects. Some buyers also approach individual Shopify store owners they come across in online forums such as Facebook groups. They may also reach out to owners of Shopify businesses that seem to be performing well or have a strong brand.
This is one way to sell your business but beware of scams and aggressive negotiators. It can be difficult to tell if the buyer speaking to you is negotiating in good faith.
Online Marketplaces
Shopify has its own Exchange Marketplace where you can list your store for sale. You can share essential details such as profit and inventory value, the digital assets you’ll include in the sale, your purpose in selling, and what level of support you’re able to offer potential buyers.
You can also sell your Shopify store on Flippa, one of the largest and most popular online marketplaces for web businesses and digital assets.
Broker
Working with a broker who’s experienced in eCommerce, and particularly in Shopify store sales, may be the best bet for selling your business at a high price point. The right broker can help you in terms of achieving a solid valuation and getting your business in good shape for the sale.
Work With An Expert
It’s difficult to navigate the waters of selling your business online. When it comes to selling your Shopify store, the experts at Raincatcher are here to help.
Our experts know what it takes to achieve the best sale of an eCommerce brand. We can also help you discover new sources of value within your Shopify business, properly help you prepare you for the sale months in advance, and negotiate the best possible price on your behalf.
Contact Raincatcher today for a free valuation of your Shopify store.
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