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You doubtless burned the candle at both ends in building up your business. It was challenging but rewarding. Now, though, it may be time to hand the reins over to someone else and start a new chapter in your life. Few entrepreneurs create businesses with the end goal of selling – and so end up making many mistakes when they eventually do get to that point. Here’s how you know it’s a good idea to sell your business and, more importantly, how to avoid shooting yourself in the foot while doing so:
Determine if you’re ready to sell
First, do some soul-searching – do you want to sell your business? Below are some signs that say yes:
Lack of enjoyment
Running your business isn’t as rewarding as it used to be. You may be stressed, have burnout, or just want to do something else with your life.
The market is about to change. You may not have the skills, resources, or desire to navigate upcoming turbulence.
People are reaching out to you with offers you can’t refuse. Your company has reached an excellent market valuation.
Your life and family may need your urgent attention. Or, as WTOP News notes, it just may be time to retire.
You must stay objective and remain grounded when evaluating whether you want to sell. Don’t let fears and doubts decide for you.
Get your house in order
Pulling out of a business involves some serious planning and legwork, as Seattle Business Magazine can tell you. You’ll need to attend to employee contracts and intellectual property rights; complete legalities like taxes; and prep your management team. You will have to prepare your business to run with or without you, depending on the final agreement you hash out with the buyer. You may also need to hire a business appraiser to value your business. It’s a good idea to consult with an attorney to cover all the ins and outs.
The financials can be the hardest to manage. You will need to have your financial statements in order – both for yourself and the buyer. Tools like QuickBooks software can be handy here – they offer in-depth reports about your cash flow. You can get insights into various aspects of your business and review trends over a specific period.
Take on a consultant
It’s always a good idea to consult with a professional. The right broker or person will help you come up with a realistic figure and assist in finding leads. However, make sure you do your research and interview several brokers or other professionals first before taking someone on – the wrong person could set you back months. Look for experience and a realistic attitude.
Think like a salesman
Yes, you’re ready and willing to sell your business – but that doesn’t mean others want to buy. You will have to be a salesman and promote yourself. This applies even when you’ve hired a broker. How do you promote the sale of a business? It’s a lot like selling a product or service. Do your market research, find the right audience, and entice them with what you have. In your case, highlight what makes your business stand out and be sure to emphasize the numbers. As Galvin Technologies explains, empathy matters the most when you’re selling .
Understand the details
When you do find a buyer, make sure you read the fine print. For example, buyers may ask for your business to hit a certain EBITDA before they release the full payment. And when you do hand them the business, the target may never be met. Some tricky details to watch out for include materiality, representations, indemnification, and non-compete clauses.
Finally, you might want to be careful about who you sell your business to. Many businesses are run into the ground by their new owners because they lack business sense. Your business is also your legacy, and sales aren’t always about the money. Consider handing it over to someone you know will do a good job of running it to avoid regrets down the road.
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