Practical Ecommerce

What website seller can do to maximize sale price

The best thing seller can do to make it very easy to sell the website is by creating a system in which business runs for itself (i.e. without sellers participation). If you can remove yourself from the business for year or more and still maintain the profitability, you can prove to the buyer that he/she can run it as easily without you. Fortunately it is lot easier to achieve this with web based business than with conventional Brick and Mortar business.

Once you’ve done that, you can work on following items to prepare your business for sale.

The Basics

• Provide solid and if possible audited financial papers to prospective buyers. Give prospective buyers financial records for the past three to five years in addition, be prepared to write a short history document explaining how you have ‘grown’ the business during key years of growth.

• Your accounting system should be efficient and easy-to-understand. There’s no bigger turn-off than facing a minefield of paperwork after purchasing a business, and a sloppy accounting system will dramatically lower your sale price.

• A systems and operations manual is a major selling point. For reputed franchises, such systems and operations manual has become key to the success of their franchisor. The systems and operations manual should be designed so the business runs with owner’s minimum involvement, delegating responsibilities and covering all possible unforeseen events.

• If your web business also has a brick and mortar retail operation, it could potentially make your business less attractive to some buyers as it will remove the “relocatable” aspect and will significantly reduce number of prospective buyers. You may want to consider sale of retail and “web only” components separately.

• Finally, explain your search marketing efforts to any prospective buyer. Tell them what makes your business unique from the competition. Show prospective buyers why it is better to buy your business than another.

Presentation

• Few of us would show a messy house to a prospective buyer, and the same applies to your business. Do your housework – a comfortable and tidy operating environment is essential.

• Look at the weaker points of your website and negate their dragging effect. Be honest with prospective buyers about any flaws the business may have, but help them come up with a solution for these flaws. Maximize the sale price of your business but make it a win-win situation for both of you.

• Show prospective buyers traffic reports and /or customer purchase history from shopping cart of your website. Steady or improving total and unique hits show a stable and healthy demand for your business giving buyers an assurance that they can buy your business confidently.

• If your business has a key staff who is willing to work with the new buyer, he/she needs to be onboard with the sale process. The business should not be dependent on this person for running. Remember, ideal business has all the pieces in place to be run as absentee owner.

• It’s a good idea to furnish the prospective buyer with a few customer testimonials. Hopefully you have built relationship with some of your regular shoppers and you can show to the prospective buyer you have repeat business as well as satisfied customers.

The Pitch

• Everyone likes feeling welcome, and a buyer ‘pitch letter’ will go some way towards creating that feeling. The pitch letter should be very much like a Chairperson’s letter in an annual review, highlighting what you have achieved so far and illustrating business goals for the future.

• You may even want to expand on the pitch letter by creating graphs displaying growth trends and the business owner’s hourly pay rate.

• Highlight opportunities for immediate growth and later expansion. ‘Challenge’ prospective buyers to exceed what you have done with the business. Give prospective buyers some enthusiasm and drive. Make them believe they can do better.

• Be careful of creating a non-existent third party – people are often quite skeptical of anyone who says, “Someone’s really interested in it, he’s coming in this afternoon to write the check.” It is generally best not to tell a prospective buyer about a third party unless you actually have one.

• Finally, give any prospective buyer a ‘guided tour’ and some on-the-job experience. Their enthusiasm for the work may outweigh their other concerns and that puts you into an excellent position for negotiations.

Putting it all together

• Carry on business as usual while you’re selling – don’t become so caught up in the selling process that the business itself suffers as a result.

• If your business is growing, sell when the market is up. The property and business markets are down at the moment and prices have flat lined because of it. It may be irritating if you’re keen to sell, but patience is a virtue and often worth thousands of dollars.

• Everyone’s after the best deal for his or her business, but both you and the buyer want to conduct the transaction at ‘fair market value’. Maximizing the sale price of your business isn’t simply a question of trumpeting its good points and sweeping its bad points under the floor; it’s a matter of showing the potential behind the business, and what can be done with it in the future.

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