E-commerce is a massive industry and has only gotten bigger over the last few months. Everyone wants a piece of the pie with Shopify’s valuation soaring at all times highs. Not everyone wants to build an e-commerce store from the ground up, however, and if you have a business that is fairly successful in a hot niche, then selling could be a good idea. But before you do, there are some things you’ll have to look at first. Let’s take a look at a few things that you should consider before selling your e-commerce store.
Do You Have a Valid Reason to Sell?
The first thing you have to look at is whether you have a good enough reason to sell your business. This is what will keep you motivated and make sure that you don’t have regrets afterward. Making a quick buck is always nice, but it can’t be your sole motivation. If you feel like it is time for you to move on and were only going through the motions, then that is a good reason. Or maybe you’re noticing changes in the industry and want to get out before things get tough. Again, this would be a great reason to start looking at what you could get for your business.
Know what Makes Your Business Valuable
Next, you have to know if your business is valuable in the first place. Having a few sales isn’t enough. There are usually a few things all valuable e-commerce stores have in common. One of them is good metrics. Metrics are one of the soundest ways to get a sense of how much a business is worth. Buyers want websites that get traffic from multiple sources, may it be social media, organic search, referrals, or advertising, among others.
Another thing people will want to look at is longevity. Even domain names with no websites gain value the longer they’re established. If you want to get good offers, your website should be at least two years old with solid growth and demonstrable statistics.
However, while traffic will help determine value, revenue is still the most important when setting a realistic valuation. There are many formulas that can be used for this, but it will usually be a multiplier of your gross revenue minus running expenses. Another way is to look at other similar stores that have been sold and base your valuation on that.
If all else fails, you can always get your business valued by a third party. You could contact a certified business appraiser or a business broker for this.
Get Your House in Order
No one will want to buy a business if your paperwork is not in order. You should be able to lay out your company’s processes in a way that will be easily understandable to prospective owners. You should also make sure that your financial papers are clean and detailed so that buyers can get a quick snapshot of the financial state of the business.
Can You Do Something to Increase Value?
Another thing you should do is see if there’s anything you can do right now to increase your business’s value. Have you used all marketing methods yet? If you’ve never used something like email or PPC marketing, you’d be surprised at how much high-quality traffic and sales you could get through these channels. Can you upgrade your website to make it more attractive or efficient?
Sometimes, it only takes a small modification to a website’s layout or color scheme to boost conversions. If you never ran your site through A/B testing yet, you might be leaving money on the table by selling right away. You should see if you can continue running the business a little longer so it can gain value as well.
You Have to Research Your Market
Even if you think people will be interested in your kind of business, you never truly know until you’ve done your research. You should also time your sale correctly. It would be a bad idea to sell during the low season when you could wait for a high. Also, make sure that there aren’t too many similar sites being sold right now.
Think about the demographics you’re trying to reach as well. You will need to craft a sales pitch that will talk to them. You also have to take your niche into consideration. If it’s a very technical niche that demands a very specific set of expertise, you can expect to wait a bit longer to make a sale.
What’s the Best Channel to Sell Your Website?
You should also know that there are multiple avenues through which you can sell your website. You have marketplaces where you can put your site up for sale and wait for people to bid on your listing or buy instantly. These have benefits and disadvantages. First of all, you get to control the whole process, which is nice. But what’s also nice is that you don’t have to pay an intermediary to make your sale.
Brokers have many benefits as well. For one, you won’t have to do any of the legwork. A broker will also usually be your best bet if you’re in a very narrow and specialized niche. You can go with a broker that is focused on your industry who’ll have access to tons of potential sellers. There’s nothing guaranteeing that you’ll be able to sell your website through a marketplace, but a broker will be able to look at your website and tell you instantly how much you can expect to realistically make for it.
Not only that, but they could give you advice right on the spot on how to increase your site’s value or about things that might be an issue. Having an expert in your corner is always comforting during important decisions like these, so you should definitely consider the option.
These are all things you’ll need to take a hard look at before deciding to sell. Make sure that you know what you’re getting into, and don’t be afraid to ask for professional help if needed.