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  • How to Sell Your Ecommerce Company for the Maximum Market Value

    May 3, 2017

    IBA, as the premier business brokerage firm in the Pacific Northwest, is firmly established as a respected professional service firm in the legal, accounting, banking, mergers & acquisitions, real estate, and financial planning communities.  Periodically, we will post guest blogs from professionals with knowledge to share for the good of owners of privately held companies & family owned businesses.  The following blog article has been provided by Patrick Foster, an Ecommerce Consultant with www.ecommercetips.org:

    How to Sell Your Ecommerce Company for the Maximum Market Value

     

    Got a five-year business game plan in place? Does that involve selling your business? Knowing how to make the most out of the next few years is going to be crucial: you have to work hard now in order to maximize your eventual resale value. Need to move even faster because you’re looking to sell soon? Thankfully, a lot of these improvement strategies can be put into place relatively quickly if you invest some time and money. Here are the key ways in which you can add value to your ecommerce company BEFORE you sell.

     

    Be as profitable as you can

     

    Buyers are always looking for profitable businesses with recurring revenue where they can ‘jump right in’ and start earning. Work hard on showing buyers that you’ve got a business that’s profitable. You will also need to demonstrate room for growth and expansion, whether that’s in your product lines or business model.

     

    1. Get to know your stats to see if anything needs improving. Look at things like average sale per customer, customer lifetime value, monthly sales, conversion rates etc. If you aren’t so good with number-crunching, get someone else to review the data for you. Make sure that you have accurate figures and that you account for any dips. (Tip: show some room for improvement in your conversion rates, as well as healthy traffic levels — this will be an easy revenue-generating win for the next owner).
    2. Have a set of well-annotated accounts covering any assets, taxes, or transfers which considerably impact the business ready for your buyer to check out. Being organized with your finances does pay off!

     

    Find your USP and develop your brand

     

    If you’ve jumped on the Alibaba bandwagon and are selling products that are widely available, you need to demonstrate that either your products, business model, or brand are unique and exceptional and will go all the way. What would get a potential buyer excited about investing in you?

     

    1. Do something different to cut through the online marketing noise. Host your very own event, find a dedicated product tribe, create the best content in your niche, cultivate a hugely loyal Instagram following: try to show uniqueness.
    2. Popular social media accounts can really help sell a brand, so spend time building up your branded accounts with a proper content strategy. The more powerful, the better.
    3. Trademarks or proof of product uniqueness are good, but not necessary.
    4. Try to get some local press and media attention while you can: it’s one of the best ways to increase your overall brand value.
    5. Have you got a great team? Are they willing to stick with the brand? Demonstrate that you’ve got a real business on your hands, down to an awesome company culture. Buyers tend to be curious and will talk to staff whenever they can; it’s important to be transparent.

     

    Invest in CX (customer experience)

     

    No one wants to buy an empty store: buyers are looking to invest in a whole customer community and brand, rather than just a domain name and some custom logo designs. Make sure that you spend time collecting social proof and building a great customer experience, not just staring at your sales dashboard.

     

    1. Collect and collate customer reviews and testimonials and store them for future use. These are a great way of showing that you’ve got an engaged and loyal customer base already: buyers don’t want to start from zero.
    2. New content strategies like user-generated content and video can help you next-level your business from a simple store to a lifestyle brand that consumers connect with long after purchase.
    3. When people buy ecommerce businesses, they buy customer data. Invest in building long term relationships with a dedicated ecommerce email platform and send out frequent email updates. These can be product stories, brand updates, or visual teasers. Track open and engagement rates and shift your content accordingly. Build niche-specific lists and present all your customer data in a well-organized CRM to the buyer.
    4. CRO, conversion rate optimization, is a big digital marketing buzzword right now. The best ecommerce stores have a good conversion-oriented layout and increasingly seek to improve on this through split-testing and user groups. It’s a good idea to show awareness of the customer journey and what steps you have taken to make it better.

     

    Pass on good supplier relationships

     

    Buyers are looking for solid supplier relationships, and preferably some ready-to-go stock. Whether drop shipping or not, make sure that your supplier management is as tight as it can be.

     

    1. Check over supplier agreements and update them to reflect the current business if needed. Provide auditable data on how supplier relations are managed, and account for any issues like late deliveries.
    2. If you are using a drop shipping solution like Oberlo to maximize automation, make sure that any app costs and management time is made explicit. Buyers can be put off by things that seem complicated.
    3. Any stock must be in pristine condition and properly accounted for in a detailed inventory. Sloppy stock won’t impress buyers.
    4. Logistics and packaging are scary words for the uninitiated. Have plenty of samples of actual parcels to hand, and let potential buyers mystery shop from your store so that they are reassured about the business.

     

    Build up your search marketing assets

     

    SEO is a core long-term business strategy for ecommerce, and any savvy buyers will be auditing your business from a search perspective (potentially with the help of an SEO agency). Make sure that you have a good SEO environment, and that you’re clued up on what’s going in the industry right now.

     

    1. Not sure how well-optimized you are right now? Survey your metadata (start with page titles and meta descriptions) and have a peek at your page headings too. Spend some time optimizing these and tweaking them so that they’re unique and compelling. Don’t over-optimize for keywords, but focus on customer-centric language instead.
    2. Do a backlink audit and disavow anything that’s causing you trouble (caution: this is best left to the experts). Haven’t got a great root domain count for links? Go out and build a few more quality links: you will be investing in your domain’s authority and your business in the long-term.
    3. Are you paying for any pay-per-click advertising (PPC)? Make sure you have adequate campaign data, including examples of landing pages. Huge PPC bills will put off potential buyers, unless they can see solid ROI.

     

    Sort out your tech assets

     

    When buying an online business, buyers will be extra-vigilant about the transfer of technological assets. Make the transfer as easy and transparent as possible, and be upfront about how you’ve found the platforms and solutions you’ve gone for. Buyers will do a lot of research beforehand, so they will probably come to your armed with tough questions.

     

    1. Some buyers will be specifically looking to buy a WordPress site or a Shopify drop shipping store; the decisions you make today will impact your ability to sell your business on in the future. It’s safer to go for popular development solutions that are likely to age well, be frequently updated, and stay safe. Payment portals are a big customer touchpoint so make sure that you’ve integrated all the possible payment and security options. It’s better to go OTT here than MVP.
    2. Get all the data you need off any third-party stakeholders like web agencies and designers before you start the sales process. You shouldn’t have any trouble accessing key web assets like your servers and hosting agreements: if you do, ask for help from an external advisor.
    3. Transferring a Magento or WooCommerce/WordPress site involves a few steps, so make sure you’ve got everything you need before you sign. If you’re selling a business built on a hosted service like Squarespace or Shopify, transfer should be straightforward — but just remember to include all the app subscriptions.

     

    Do you want to sell your business? To get the best price, leave it to the experts. On your end, make sure that you implement a proper optimization, search, and content strategy to increase your resale value in a short time. Focus on building a credible brand and build relationships with influencers and the communities who follow them. If you could buy any ecommerce business out there right, who would you snap up, and why?

     

    Patrick Foster, ecommerce writer & marketer

    Ecommerce marketer with 10+ years in the industry. I specialize in search and content marketing for SMEs, but also go in and help with business development and management. Always curious and out to find out more about what makes online businesses succeed.

    If you have questions related to any component of this article, Patrick Foster would welcome the opportunity to provide additional information.  Mr. Foster can be reached at (503) 445-9568 or patrick@ecommercetips.org.

    IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, and mergers & acquisitions community on subjects relevant to the purchase & sale of privately held companies and family owned businesses.  IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.

     

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