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How Much Should You Sell Your Business For
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Understanding The Seller (and Why It’s Important)
There may come a time when you want or even need to sell your online business. The thought can be overwhelming, especially if you don’t know where to start. But preparation beforehand will help you get the most out of your sale and get the most value possible.
If you’re in doubt or wondering if your business can get a good price, check out the types of businesses that sell the most:
People may decide to sell their business for many reasons. Often this is because there is a good opportunity; maybe business is going well and you want to cash in while you can. But there are many other situations that can prompt you to sell, including:
No one but you can decide when the time is right to sell your business, but it helps to know what you’re dealing with if you’re thinking about it.
What Is A Business Model With Types And Examples
Selling your business means getting your paperwork, documents and finances in order so that the business can continue to run as normal under a new owner. The smoother you make the transition, the easier it will be to sell your business and ultimately get a good price for it.
To ensure smooth sales, you need effective systems in place and working, consistent and accurate data, and easy-to-manage healthy finances.
It can help to get these three things in order before you even consider selling. In fact, they are the backbone of running a business, and it never hurts to have them set up and ready to go from the first moment you start trading.
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Accurate data will show how successful your business is in a non-monetary sense. This will give potential buyers an idea of what kind of traffic your site is getting, what customers you are serving and how effective your marketing efforts are.
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Keeping accurate numbers about your sales and expenses is critical to determining the value of your business. This is probably the most important thing you’ll need when selling, so keeping track of your finances and documenting them properly from the start will save you a lot of headaches.
Instead of rushing to crunch the numbers right before the sale, do it right from the start. It will also help you stay on top of your expenses and give you a clear picture of how well your business is doing. If you have the resources, get an accountant or bookkeeper to make sure you’re doing it right. Having a second set of professional eyes on your numbers will help build credibility when you’re ready to sell, too.
Drafting a standard operating procedure (SOP) will help you identify your systems and processes to potential buyers. It’s basically a document that details how you go about various tasks like product selection, keyword research, product listing writing, search engine optimization, and content creation.
Similar to your finances, it helps to document these processes as you go. Instead of scrambling to create a random folder of information at the last minute, carefully outline each process so that the buyer can continue to transact as usual. This will also help ensure that they are accurate and up-to-date. If you change a process somewhere, be sure to also change it in your SOP so that the new owner is not relying on the old systems.
How Much Can You Sell Your Business For?
Of course, you want to get the best possible price for your business—after all, you’ve spent time, money, and effort getting it to the point where you can sell it. There are some things you can do to increase the value of your business and make sure it’s in great shape before you sell it.
Having a well-optimized website usually means more traffic and more leads. Make sure your website is optimized for well-searched keywords so that it ranks high in Google search results, which will give you an advantage when you’re trying to sell. A serious search engine optimization effort also means consistent (and often constantly improving) traffic numbers—something that potential customers will be happy to hear about.
Many companies have special agreements with their suppliers, especially if they have been cooperating for a long time. If the deal has helped your business succeed or is an important part of your operation, it’s important that it continues after the sale (or at least you mention that it contributes to your success).
If you can, make sure that your agreements with suppliers, manufacturers, influencers and other partners will continue under the new owner. For example, if you have a deal with a certain vendor that gives you a discount that helps increase your profit margin, make sure you transfer that to the new owner.
Essential Factors You Need To Consider Before You Sell Your Business
Is selling your business on the horizon for you? If so, it’s time to step up your efforts. While you may feel like slowing down during the year before you sell (especially if you have other ventures or adventures on your mind), staying active and performing well in your final year will really help you get the best price possible.
The more profit you make, the more you can sell your online business. So, if you know what you want to sell in the next 12 months, start ramping up your marketing efforts and streamlining your operations for that final big boost in revenue. Most buyers will look closely at your sales from last year, so showing high numbers will increase your chances of getting a good price.
Your business may be priceless to you, but there is always a number. In fact, the standard online business valuation formula consists of two parts:
For example, if your average monthly net income is $15,000 and you choose a conservative sales multiple of 20x, your business would be valued at $300,000. If your business has huge growth potential and has doubled or tripled its monthly revenue month after month, you can go for a higher multiple (if you go for 60x, your list price will be very comfortably at $900,000).
Reasons You Should Sell Your Business
This formula can work backwards or forwards. You can either sell your business for 20-60 times your average monthly net profit, or figure out how much you want to sell your business for and then figure out how much you need to make every month to get it.
If you’re determined to make $500,000 selling your business, it’s safe to assume you’ll need to make an average net profit of $25,000 per month.
Ready to sell, but don’t know where to start looking for a buyer? Here are the top three ways to safely market your online business.
Similar to a private car sale, you are responsible for finding potential buyers, providing all information and conducting all negotiations. Doing it this way saves you brokerage fees, but it can be time-consuming and you need to know your business and be able to negotiate to get the best results.
Expert Advice To Help You Prepare To Sell Your Business #financeyourbusiness
Broker sales involve the assistance of a third-party broker who knows how to help people buy and sell online businesses. To market your business in this way, you will need to pass all the relevant data you have to the broker, who will process it from there. The information you need includes:
The influx of online businesses has spawned what are called “flip websites,” which are essentially marketplaces for buying and selling businesses. They operate similarly to brokerages, but already have a built-in audience and typically charge lower rates than brokers or take a cut of the sale.
Selling your online business can seem overwhelming, but it can also be incredibly exciting, especially if it’s something you planned from the start. Reduce overwhelm by preparing everything you need ahead of time. Not only will this help you stay on top of your books and processes for your own sake, but it will also ensure you get an easy sell and the best price.
Yes, you can sell your online business. Depending on the size and scope of your business, you may need to hire a broker or lawyer to help you through this process.
Selling Your Business: The Ultimate Guide
Evaluating an online business can be a complex process. Some of the key factors to consider when evaluating an online business include: current and projected revenue, assets and liabilities, user base, and customer reviews and ratings. In addition, the business’s growth potential and competitive landscape should be taken into account. A professional appraisal may be necessary to accurately determine the value of an online business.
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