How Do You Sell Your Online Business?
The COVID-19 pandemic has shifted consumer behavior, and online businesses are benefiting from the change. Advances in technology make online purchases faster and more convenient over time.
eCommerce businesses are capturing an increasing share of sales. According to eMarketer: “US consumers will spend $933.30 billion on ecommerce in 2021, up 17.9% year over year, and equaling 15.3% of total retail sales.” These eCommerce growth trends are expected to continue.
If you’re wondering how to sell your online business, start by having a discussion with an experienced business broker. A broker can help you identify areas where you can increase the value of your business before a sale.
Position in the Market
Think about how your business is perceived in the market, and how you perform against the competition.
Competitive Differentiation
If your business is seen as unique in the marketplace, customers can differentiate between your product and the competition. What makes your business unique and different in the eyes of the consumer?
Brand Awareness
Impact reports that: “the average person is exposed to upwards of 5,000 brand messages per day.” If customers know about and like your brand, they are more likely to buy your product.
Niche Businesses
You may focus on a particular niche, and become the preferred business in that niche. If you operate in a niche, you can target your marketing efforts to a smaller market. You’ll learn about your target market’s needs faster, and do a better job at solving their problems.
According to Shopify: “Niche products often have a more passionate customer base, which can make selling to specific crowds easier by raising awareness for your products.”
Customer Experience
You can make it easy to find, understand, and buy your products. The customer’s journey from finding your website to receiving your product must be clearly stated. Make the buying process easy for your customers, and they’ll keep coming back.
Your website is the key factor that influences the customer experience.
Optimize Website Performance
If you can increase website traffic, and motivate viewers to stay on the website for longer periods, you can increase revenue from the site.
Take these steps to optimize your website before looking for a buyer:
Content strategy: What information is most helpful for your audience? To find out, analyze competing websites and review the blog posts, videos, and other content that they post. Use this information to consistently post information that solves a problem for your audience.
Search engine optimization (SEO): Moz defines SEO as the practice of increasing the quantity of traffic to your website through organic search engine results. Organic traffic is not paid website traffic, it is a key metric that indicates your website’s value. You can use keywords and website article design strategies to increase SEO.
Promotion of social media, paid advertising: Many sites promote their content on Twitter, Facebook, and other platforms. You may post content with the goal of increasing organic website traffic, or pay for ads on social media platforms.
Email list: One of the most valuable tools to promote your products and services is an email list. Consider offering free resources to website visitors, in exchange for an email address. You can send targeted messages to your email subscribers to sell products and services.
Mobile-friendly: A growing percentage of website traffic comes from mobile devices. Work with a programmer to ensure that your site is easy to view and navigate on mobile. If you use WordPress, you can review website templates and see how they look on a mobile device.
Take these steps to optimize your website, and wait a few months until you can see the improved traffic statistics on Google Analytics. Better traffic statistics indicate that your business is more valuable.
Next, research the problems your customers face, and how to solve them.
Spend Time With Customers
If you’re generating a profit, it’s because you have a core group of loyal customers. These are the people you really want to serve, and you should reach out to them. Try these approaches:
Survey: Ask your repeat customers to complete a short (under 5 minute) survey and provide an online link. Offer a small gift to motivate people to complete the survey. Gather the data for analysis.
Customer support: When a customer calls or emails your support team use the contact as an opportunity to ask questions. Are they satisfied with your products and services? Is there confusion about the buying process or using the product? Document their responses and look for trends.
Customer feedback should drive your decisions regarding website improvements, as well as the products that you sell.
A purchaser needs to know exactly how you operate your business, so that the transition after the sale goes smoothly.
Create a Procedures Manual
A procedures manual documents every routine task in your business. The manual describes your procedures for sending an invoice, ordering materials, and how you reimburse employees for travel expenses. The document explains who completes the task, and how often.
Using a manual eliminates staff confusion about how tasks should be completed, and the document also serves as a training tool for new employees.
If you’ve written code to operate your business, you must consider the buyer’s ability to use the code. The source code must be well documented with annotations and notes that help the buyer’s programmers operate the software. The code must be tested, so that a buyer can rely on its accuracy of the code.
Once you have worked with a broker to assess the business value, the broker will create marketing materials to explain your value proposition. There are two frequently used methods to value a business.
Business Valuation Methods
The two most common valuation metrics are seller’s discretionary earnings (SDE), and earnings before interest, taxes, depreciation, and amortization (EBITDA). Your company’s sale may be based on a multiple of these balances
Applying SDE to the Valuation
The seller’s discretionary earnings (SDE) balance assesses company value based on the earnings that an owner generates. Here’s the formula:
(Pre-tax, pre-interest earnings) + (vehicles, travel, other transactions listed as business expenses)
SDE adds back business expenses that have some personal benefit to the owner. In addition to vehicles and company travel, you may add back charitable donations and your company salary. The goal is to calculate the total financial benefit earned by the owner.
Using EBITDA for a Valuation
The earnings before interest, taxes, depreciation, and amortization (EBITDA) formula is a commonly used metric to value businesses. As the name implies, this method adds back some expenses to the earnings total.
You may find a buyer through your own connections, your broker’s network of contacts, or by listing your business on a seller’s website.
Finding a Buyer
There are a number of websites that list online businesses for sale, and these are two of the largest sites:
BusinessForSale.com
This site lists over 60,000 businesses for sale, and the website has advertised 1.5 million businesses since it was launched in the late 1990s. More than 1,500 owners sell their business through the site each month.
BizQuest
This online service was founded in 1994, and the firm has played a part in hundreds of thousands of business sales. This website generates 300,000 unique views per month.
Many sellers find that the broker’s network of attorney’s, accountants, and investors is the fastest way to find a qualified buyer. Consider handing off the time-consuming tasks of selling your business to an experienced broker.
Work With an Expert
Raincatcher’s goal is to help entrepreneurs buy and sell remarkable companies, and they have successfully brokered thousands of transactions. Get in touch with Raincatcher today for a free evaluation of your online business.
The COVID-19 pandemic has shifted consumer behavior, and online businesses are benefiting from the change. Advances in technology make online purchases faster and more convenient over time.
eCommerce businesses are capturing an increasing share of sales. According to eMarketer: “US consumers will spend $933.30 billion on ecommerce in 2021, up 17.9% year over year, and equaling 15.3% of total retail sales.” These eCommerce growth trends are expected to continue.
If you’re wondering how to sell your online business, start by having a discussion with an experienced business broker. A broker can help you identify areas where you can increase the value of your business before a sale.
Position in the Market
Think about how your business is perceived in the market, and how you perform against the competition.
Competitive Differentiation
If your business is seen as unique in the marketplace, customers can differentiate between your product and the competition. What makes your business unique and different in the eyes of the consumer?
Brand Awareness
Impact reports that: “the average person is exposed to upwards of 5,000 brand messages per day.” If customers know about and like your brand, they are more likely to buy your product.
Niche Businesses
You may focus on a particular niche, and become the preferred business in that niche. If you operate in a niche, you can target your marketing efforts to a smaller market. You’ll learn about your target market’s needs faster, and do a better job at solving their problems.
According to Shopify: “Niche products often have a more passionate customer base, which can make selling to specific crowds easier by raising awareness for your products.”
Customer Experience
You can make it easy to find, understand, and buy your products. The customer’s journey from finding your website to receiving your product must be clearly stated. Make the buying process easy for your customers, and they’ll keep coming back.
Your website is the key factor that influences the customer experience.
Optimize Website Performance
If you can increase website traffic, and motivate viewers to stay on the website for longer periods, you can increase revenue from the site.
Take these steps to optimize your website before looking for a buyer:
Content strategy: What information is most helpful for your audience? To find out, analyze competing websites and review the blog posts, videos, and other content that they post. Use this information to consistently post information that solves a problem for your audience.
Search engine optimization (SEO): Moz defines SEO as the practice of increasing the quantity of traffic to your website through organic search engine results. Organic traffic is not paid website traffic, it is a key metric that indicates your website’s value. You can use keywords and website article design strategies to increase SEO.
Promotion of social media, paid advertising: Many sites promote their content on Twitter, Facebook, and other platforms. You may post content with the goal of increasing organic website traffic, or pay for ads on social media platforms.
Email list: One of the most valuable tools to promote your products and services is an email list. Consider offering free resources to website visitors, in exchange for an email address. You can send targeted messages to your email subscribers to sell products and services.
Mobile-friendly: A growing percentage of website traffic comes from mobile devices. Work with a programmer to ensure that your site is easy to view and navigate on mobile. If you use WordPress, you can review website templates and see how they look on a mobile device.
Take these steps to optimize your website, and wait a few months until you can see the improved traffic statistics on Google Analytics. Better traffic statistics indicate that your business is more valuable.
Next, research the problems your customers face, and how to solve them.
Spend Time With Customers
If you’re generating a profit, it’s because you have a core group of loyal customers. These are the people you really want to serve, and you should reach out to them. Try these approaches:
Survey: Ask your repeat customers to complete a short (under 5 minute) survey and provide an online link. Offer a small gift to motivate people to complete the survey. Gather the data for analysis.
Customer support: When a customer calls or emails your support team use the contact as an opportunity to ask questions. Are they satisfied with your products and services? Is there confusion about the buying process or using the product? Document their responses and look for trends.
Customer feedback should drive your decisions regarding website improvements, as well as the products that you sell.
A purchaser needs to know exactly how you operate your business, so that the transition after the sale goes smoothly.
Create a Procedures Manual
A procedures manual documents every routine task in your business. The manual describes your procedures for sending an invoice, ordering materials, and how you reimburse employees for travel expenses. The document explains who completes the task, and how often.
Using a manual eliminates staff confusion about how tasks should be completed, and the document also serves as a training tool for new employees.
If you’ve written code to operate your business, you must consider the buyer’s ability to use the code. The source code must be well documented with annotations and notes that help the buyer’s programmers operate the software. The code must be tested, so that a buyer can rely on the accuracy of the code.
Once you have worked with a broker to assess the business value, the broker will create marketing materials to explain your value proposition. There are two frequently used methods to value a business.
Business Valuation Methods
The two most common valuation metrics are seller’s discretionary earnings (SDE), and earnings before interest, taxes, depreciation, and amortization (EBITDA). Your company’s sale may be based on a multiple of these balances
Applying SDE to the Valuation
The seller’s discretionary earnings (SDE) balance assesses company value based on the earnings that an owner generates. Here’s the formula:
(Pre-tax, pre-interest earnings) + (vehicles, travel, other transactions listed as business expenses)
SDE adds back business expenses that have some personal benefit to the owner. In addition to vehicles and company travel, you may add back charitable donations and your company salary. The goal is to calculate the total financial benefit earned by the owner.
Using EBITDA for a Valuation
The earnings before interest, taxes, depreciation, and amortization (EBITDA) formula is a commonly used metric to value businesses. As the name implies, this method adds back some expenses to the earnings total.
You may find a buyer through your own connections, your broker’s network of contacts, or by listing your business on a seller’s website.
Finding a Buyer
There are a number of websites that list online businesses for sale, and these are two of the largest sites:
BusinessForSale.com
This site lists over 60,000 businesses for sale, and the website has advertised 1.5 million businesses since it was launched in the late 1990s. More than 1,500 owners sell their business through the site each month.
BizQuest
This online service was founded in 1994, and the firm has played a part in hundreds of thousands of business sales. This website generates 300,000 unique views per month.
Many sellers find that the broker’s network of attorneys, accountants, and investors is the fastest way to find a qualified buyer. Consider handing off the time-consuming tasks of selling your business to an experienced broker.
Work With an Expert
Raincatcher’s goal is to help entrepreneurs buy and sell remarkable companies, and they have successfully brokered thousands of transactions. Get in touch with Raincatcher today for a free evaluation of your online business.
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