Jock Purtle joins the 15th session of Smart Brand Marketing with your host Tom Libelt.
One of the best online business models is to build up companies/websites fast and sell them for a multiple of their monthly revenue. This comes with its own set of challenges and we address those today.
Selling Your Business Online: Things to Keep in Mind
Parting with your business can be difficult. After all, it’s your baby. You had been there right from the start, you’ve put in a lot of money and effort to make it competitive and, eventually, it started selling and even peaked.
But there comes a time when you have the option to push things further or let someone else run the business. This is where selling your business in the market becomes a viable course of action.
The only problem is that selling your business is not as easy as it was today. Unless, of course, you’re not limiting yourself to physical markets. Selling your business online can prove to be a rather convenient option that, if done right, can net you the best figures in the fastest way possible. To do that, there are several aspects that you have to go over through.
Why Should You Sell Your Business?
Before anything else, you should establish first why you should sell your business in the first place. Parting with something that you’ve invested in and may still have some profitability in it is something that you would rather not do, after all.
Regardless of what reasons you have to sell your business, it is best that you consider three areas first.
- 1. The Business’s ValueRunning a business gets riskier the longer you do it. The more a business grows, the more chances of failures you will have to consider. Your business’s current value will be a primary consideration when selling your business because, for most of the part, it will dictate whether or not selling your business is a profitable move now.
There are many ways to get the value for your business but it all boils down to taking a look at all of your financial records and see how much you are earning versus how much you have invested in it. With that in mind, selling your business just because it’s doing poorly is not a good idea especially if you are doing so to get most of your investments back.
- 2. The RisksThe reason why business gets riskier as time passes is because risk does have a direct effect on your business’s value. When you are still starting, you can take any risk that you want because your business has not yet that much to lose. As a matter of fact, being an active risk-taker is one way of establishing yourself and your business in the market quickly.
However, as time passes and your business’s value grows, the risks your strategies would entail get harsher and harsher. Soon enough, you’d be doing more effort to control the damages that a poorly executed strategy you had implemented for your business while also dealing with customer retention. It’s basically like the human experience, really. You tend to be more reckless when you are younger as you try out new things but become more careful as time passes because every slip up hurts more.
This is why some business owners tend to become more conservative with the risk-taking when their business gets established. This is also why some owners find ways for an exit while the business is still in a good position in the market.
- 3. A Time for ChangePerhaps the most understandable (and common) reason why you want to have your business sold is that you are simply tired of it. Dedicating years into making your business work can take a toll on anybody which is why business owners feel that they are ready to retire once their businesses reach a decade or more.
Also, some would want to seek new opportunities but can’t because they are bound to their priorities i.e. running their businesses. Selling the business is a good way of cutting up your ties with it (amicably, at best) while opening yourself up to newer projects and other priorities.
How Do I Go about Selling My Business?
Assuming that you are going to do all the selling yourself, there is actually several options presented to you online to entice buyers to your offer.
- 1. Privately This is straightforward but deceptively tricky of an option. The premise is that you will have to put every information of your business to the site, and the price for it, and wait for a potential buyer to get interested enough in it to take you on your offer.
The problem here is where you should sell your business as doing it on your own website is not really effective even if there is a considerable traffic going through it.Your next bet is to get the business listed on online marketplaces that cater to turnkey businesses (that’s another term for businesses with pre-made assets ready for new owners, if you don’t know).
Getting listed in these sites would help make your offer become more visible while the tools that such sites offer will help you filter through buyers, communicate with them, and even promote your business.
- 2. To a CompetitorSelling to your competitor will take a lot of guts. After all, it’s like waving the white flag at them and conceding defeat. But a competitor buying your business does have some advantages. First, they are in the same market as you and know how to operate a business similar to what you have so you should be at least assured that your business is going to be in good hands. Next. If the competitor is performing better than you in the market, then they will know how to improve your brand once it becomes under their ownership.
The challenge here is in actually convincing them that there is some value to keeping your business alive. One common occurrence in the market is for businesses to “buy out” their competitors and have all of their assets liquidated sometime later. It’s one way of legally killing the competition and making sure that they won’t resurface in any other shape or form in the future.
When selling your business to the competition, you must make certain that they really understand why your business will become an asset to them. Perhaps you are tapping another market that they have yet to venture into or some services you offer complement the ones that they already have. It’s up to you, really, on finding ways to convince the buyer that they are making a good deal with you.
- 3. To an EmployeeThink of this option this way: who else out there is as competent as you in running the business as someone you have personally trained and worked with for years? An employee can make for a viable seller in the sense that they know the business from the inside and out, have a full grasp of your long-term plans for it, and have built rapport with the rest of your staff. It’s like passing the torch to them, really, only that you get money for it in exchange.
The only problem here is that an employee does not have the capital to buy your business in that instant. If they have, well, they won’t be working for you in the first place. As such, raising capital is the only option for them and this will take time.
With that in mind, it is best that you consider selling your business to an employee if you are willing to wait for them to come up with the capital to match your asking price for the business.
Another way to do this is to promote that employee to your position while you retire. You won’t get your initial investments quickly but you do get a portion of income without having to do work for it since you are still the owner. Plus, you now have the time to pursue other interests. So, technically, this is not the worst alternate path to take for seeing yourself out of your business.
Making Your Offer More Enticing
Once you have identified how you can sell your business, the challenge now is to, well, actually sell it. Regardless of how much your offer is, and whether or not this reflects its current value, there are ways to make it more attractive. Here are a few ways how:
- 1. Have an Exit PlanIn most cases, having sign an exit plan is a telltale sign that you have planned for every detail and outcome for your business. This also means that you should have one right from the very beginning or, at the very least, are in the process of coming up with one as your business is starting to grow.
An exit plan can involve as something as simple as succession where you turn over management of the business to another or something as variable as contingencies in case something goes wrong in the middle of your operations. Either way, an exit plan helps you prepare your business which leads to the next tip.
- 2. Organize EverythingOne thing that buyers have to worry about with taking over a business is the amount of time they have to focus on adjusting to the systems you have set. A poorly optimized operational system will have new buyers wasting a lot of time and effort learning how everything works or, worse, addressing issues in it right from the start.
Sadly, many owners sell their businesses when everything is not running smoothly which makes it hard for the new owner once they take over. This leads to poor offers on your business and plenty of bad blood between you, the staff you are leaving behind, and the new owners. If possible, have everything streamlined before you leave which includes in-department communications, productions, distribution, cash flows, licenses and permits, and even here staffing.
- 3. Use Social Media as LeverageAlthough you might still want to keep everything professional and confidential in selling your business, you can still use social media to bring attention to your sale to a degree. As such, when selling your business, do take advantage of your social media platforms as they offer a lot of tools that can help you reach out to your target audience as quickly as possible.
Sure’ you still have to deal with the usual kibitzers (the folk that ask a lot of questions why you are selling your business or providing commentary without having any interest to buy it from you. There’s no avoiding them, sadly), but social media can drum up interest for your offer to a considerable degree.
You also don’t have to lay out every important detail of your business out in public. Just get the basics out and reveal the finer details of the offer to those that pass your screening process.
- 4. Negotiate WiselyThe negotiation process is perhaps the most delicate part of the sale and this is where your ability to handle counteroffers can make or break the entire affair. First of all, you can’t go for the bullish route because that can intimidate meeker people or rile up the more aggressive one. Regardless of who you are dealing with, being too stubborn with your offer can lead to communications between your parties breaking down.
On the other hand, you can’t be too meek or aim to please all since that leaves you open to getting lowballed (being offered the lowest possible price). It’s important that you find a balance between being firm and being lenient. Make it clear that this is your offer for the sale but allow sellers to make another offer; so as long as it is reasonable, of course.
There is an art of sorts in exiting from your company. From the way you prepare everything for the new owners to the way that you negotiate your offers, it will take some skill (and a whole lot of diplomacy) on your part to communicate with sellers and still get the most out the transaction.
However, what should be the focus here is in assuring the continued survival of your business. Regardless of who runs it or who legally owns it, the point you must make in selling your business is to give your soon-to-be former business a chance to revitalize itself and, hopefully, remain as competitive as possible in the market.
Are you planning to sell your business in the future? What other ways can you think of in making a graceful exit from it? Let us know in the comments section down below.
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