jsdev
New Contributor
I’m coming out of the shadows to give some value back. I owe a lot of this forum.
I got my start in ecommerce a back in 2013 when I read @biophase first ecommerce thread.
I won’t go into details of getting started in ecom, as his threads cover the fundamentals, and he knows his shit.
So I want to share my experiences in selling an ecommerce business. This is not the blueprint to sell every business, so please do not gamble your business life and take my words as gospel, but mine went down smooth, so I wanted to share.
So knowing what I know now, BEFORE you sell your business..
1. Know why you want to sell. Buyers will ask you this. As a rule, it's better to be transparent, and not bullshit your buyers.
2. Have clean books from day one & have a great accountant. I wasted a lot of time and ultimately money working with a cheap bookkeeper who was a hack. When I was looking to sell it took a lot of time and money with a new accountant to clean up the mess. Get in the habit of tracking your financials on a monthly/quarterly basis and don't skimp on this expense.
3. Have strong relationships with your suppliers: Over the years I worked with my suppliers, I always put a lot of effort into the relationships. Get to know everyone who works there on a personal level. This paid dividends during the sale. When it came down to transitioning from me to the new owners of the business, it went flawlessly.
4. Have an Idea of what you want for the business before you sell- Could be 1x-10x profit. There’s no right or wrong answer here, it comes down to you and your lifestyle. Do your own research, and know what you want coming in. Talk to as many people as you can about this one, not just your broker.
5. Know the kind of buyer you want. For me it was very important to have someone who I like as a person, is tech savvy, and understood the risks In buying an ecommerce business. I’d take a and positive business relationship over an adversarial one as I'll be able to do business with them again in the future.
6. Find a good business lawyer. You will need them later in the process when it comes to contracts.
So knowing all this, here’s how my deal played out...
First, I Hired a business broker. I managed to find a good one, but not before interviewing some shady characters.
Some broker red flags:
So choose a reputable broker. Look for red flags. Trust your gut.
Next stage, I worked with the broker to develop a 'blind-summary’. This is well presented booklet a buyer will see after signing an NDA, this can include:
This stage took about 3-4 months to find the right buyers.
When a call took place, It usually got stated with questions like:
Business Background, why am I selling, how the day to day works and where the opportunities are to expand.
The important thing here is be straight up. I was very open about how you could expand the business, and what I would do over the next 3, 6 and 12 months.
In saying that, you do not need to give away every little specific detail of the business, and your broker should be schooling you on how to conduct yourself if they are worth a dime.
I got a mixed bag of potential buyers on those first calls. Some were a good fit. At the other end of the scale, there was the dreamers, borrowing 100%, who could hardly use a computer. I would politely talk them out of it.
It helps if you are screening during the initial call, as you are less likely to come across as desperate to sell.
Those who got past the call stage would come meet me and the broker at the business for a tour. Only 2 buyers got to this stage.
I had a good feeling about one of the buyers, so we went to have a meeting with the key supplier and a tour of their facility, who were excellent (because I had invested in the relationship) and took the time to answer any questions the buyers had... they did the selling for me.
After that, an offer came very quickly. First offer was exactly what I wanted and I accepted it.
The saying is ‘never accept the first offer’, and I’m sure I could negotiate more, but I felt I got what I wanted and was happy to be out.
So contracts were drawn up by lawyers, terms were negotiated and we both signed.
Next stage, I worked with the business for a week to get them set up. We negotiated that I’d be available on site for 10 working days (9-5), and over the phone for up to 3 months.
In the end, I was only there for 3 days, and have answered about 5 emails since. My buyers are pretty awesome. So overall, it could not have went any better.
What am I doing now?
The business really took over my life for a few years, so I’ve gone back to go university and finish off my degree, and plan to start a new venture after that. To keep sharp I continue to work as a developer & marketer for a few ecom clients.
Recommended Resources
Biophases ecom threads.
Built to Sell
How to win at sport and business.
Every Episode of The Profit.
Ezra Firestone’s stuff. He’s great for paid traffic.
Clarity.fm .. Best website on the internet.
Ecommerce Fuel podcast.
Looking back now, a big turing point in my life was reading this forum. So feel free to hit me up, always got time for anyone in the trenches.
I got my start in ecommerce a back in 2013 when I read @biophase first ecommerce thread.
I won’t go into details of getting started in ecom, as his threads cover the fundamentals, and he knows his shit.
So I want to share my experiences in selling an ecommerce business. This is not the blueprint to sell every business, so please do not gamble your business life and take my words as gospel, but mine went down smooth, so I wanted to share.
So knowing what I know now, BEFORE you sell your business..
1. Know why you want to sell. Buyers will ask you this. As a rule, it's better to be transparent, and not bullshit your buyers.
2. Have clean books from day one & have a great accountant. I wasted a lot of time and ultimately money working with a cheap bookkeeper who was a hack. When I was looking to sell it took a lot of time and money with a new accountant to clean up the mess. Get in the habit of tracking your financials on a monthly/quarterly basis and don't skimp on this expense.
3. Have strong relationships with your suppliers: Over the years I worked with my suppliers, I always put a lot of effort into the relationships. Get to know everyone who works there on a personal level. This paid dividends during the sale. When it came down to transitioning from me to the new owners of the business, it went flawlessly.
4. Have an Idea of what you want for the business before you sell- Could be 1x-10x profit. There’s no right or wrong answer here, it comes down to you and your lifestyle. Do your own research, and know what you want coming in. Talk to as many people as you can about this one, not just your broker.
5. Know the kind of buyer you want. For me it was very important to have someone who I like as a person, is tech savvy, and understood the risks In buying an ecommerce business. I’d take a and positive business relationship over an adversarial one as I'll be able to do business with them again in the future.
6. Find a good business lawyer. You will need them later in the process when it comes to contracts.
So knowing all this, here’s how my deal played out...
First, I Hired a business broker. I managed to find a good one, but not before interviewing some shady characters.
Some broker red flags:
- Some will pressure to put a lower price so they can flog the business quicker.
- Another broker talked extensively about selling to “dumb buyers,” and withholding the realities of running an ecommerce business to get the sale through quickly. FYI, ‘dumb buyers‘ are people who think they can buy an online business, sit back and watch the money roll in. I decided to stay away from these buyers as the transition would be very difficult.
- Another red flag is a broker suggesting you don’t need a lawyer because they only slow things down and overcharge. True, they might be expensive, but its better to cover your a$$ and have a 3rd party to look over contracts.
So choose a reputable broker. Look for red flags. Trust your gut.
Next stage, I worked with the broker to develop a 'blind-summary’. This is well presented booklet a buyer will see after signing an NDA, this can include:
- Monthly income statements trailing 36 months
- Screenshot of Google Analytics traffic (unique sessions) last 24 months
- Screenshot of Google Analytics showing traffic sources (organic, PPC, etc)
- A summary of the history of the business, challenges, big wins, growth opportunities.
This stage took about 3-4 months to find the right buyers.
When a call took place, It usually got stated with questions like:
Business Background, why am I selling, how the day to day works and where the opportunities are to expand.
The important thing here is be straight up. I was very open about how you could expand the business, and what I would do over the next 3, 6 and 12 months.
In saying that, you do not need to give away every little specific detail of the business, and your broker should be schooling you on how to conduct yourself if they are worth a dime.
I got a mixed bag of potential buyers on those first calls. Some were a good fit. At the other end of the scale, there was the dreamers, borrowing 100%, who could hardly use a computer. I would politely talk them out of it.
It helps if you are screening during the initial call, as you are less likely to come across as desperate to sell.
Those who got past the call stage would come meet me and the broker at the business for a tour. Only 2 buyers got to this stage.
I had a good feeling about one of the buyers, so we went to have a meeting with the key supplier and a tour of their facility, who were excellent (because I had invested in the relationship) and took the time to answer any questions the buyers had... they did the selling for me.
After that, an offer came very quickly. First offer was exactly what I wanted and I accepted it.
The saying is ‘never accept the first offer’, and I’m sure I could negotiate more, but I felt I got what I wanted and was happy to be out.
So contracts were drawn up by lawyers, terms were negotiated and we both signed.
Next stage, I worked with the business for a week to get them set up. We negotiated that I’d be available on site for 10 working days (9-5), and over the phone for up to 3 months.
- Just in your contract, Be specific in the times you are available, if you sell to an a**hole, they might insist you stay on site 24 hours a day for 10 days and can call you at midnight every night for 3 months. This is where having a lawyer is useful.
In the end, I was only there for 3 days, and have answered about 5 emails since. My buyers are pretty awesome. So overall, it could not have went any better.
What am I doing now?
The business really took over my life for a few years, so I’ve gone back to go university and finish off my degree, and plan to start a new venture after that. To keep sharp I continue to work as a developer & marketer for a few ecom clients.
Recommended Resources
Biophases ecom threads.
Built to Sell
How to win at sport and business.
Every Episode of The Profit.
Ezra Firestone’s stuff. He’s great for paid traffic.
Clarity.fm .. Best website on the internet.
Ecommerce Fuel podcast.
Looking back now, a big turing point in my life was reading this forum. So feel free to hit me up, always got time for anyone in the trenches.
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