7 Steps to Sell a Business Quickly
An online business can provide you with a lucrative monthly income, but it’s also a great ace up your sleeve if you quickly need a lump sum of money.
Whether you want to purchase real estate, raise capital for another business venture, or pay for your child’s college tuition, your online business provides you with the necessary, available capital … that is, if you can sell it quickly enough.
Selling a business isn’t like trading in your used car at the dealership. It can be a long and arduous process.
Ideally, sellers should start preparing their business for sale at least a year in advance, but if time isn’t on your side, this isn’t always possible.
The good news is that making a quick exit from your business doesn’t mean you have to settle for less money.
In this article, I’ll fill you in on how to avoid some costly, time-wasting mistakes and make your business irresistible to potential buyers.
Still here? Then without further ado, let’s dive in and learn how to secure a speedy sale, without sacrificing profit.
1. Choose a Platform to Sell Your Business On
Thanks to the vastness of the internet, the good news is that there is no shortage of websites and platforms where you can sell your online business.
The most common options that sellers turn to are online business brokers and private sales.
If you want to sell your business fast, the key factor you need to look out for is a large pool of prospective buyers.
If you opt for the route of a private sale, you’ll have to source interested buyers yourself. This can slow down the sales process significantly.
However, if you have a lot of connections in the industry or advertise your business well enough, you’ll probably be able to drum up enough interest to make a speedy private sale.
If you’re short of connections or trying to keep the sale of your business under wraps from your competitors, using a broker may be the way to go. Professional M&A brokerages have the resources to connect you with large pools of qualified buyers who would normally be out of your reach.
They also vet the buyers, ensuring that you are only put in contact with serious buyers who won’t waste your valuable time. Another time-saver is the single point of contact provided by brokerages, streamlining communication between you and potential buyers.
To give you an idea of what to expect, on the Empire Flippers marketplace, it takes an average of 20 days for an offer to be accepted on a 7–8 figure Amazon FBA business.
2. Prepare Your Business for Sale
To sell your online business quickly, shift gears from growing the business to streamlining it.
Think about it this way: If you were selling your car, you’d clean out all the clutter, have it valeted, and polish out all the little dents and scratches in the paintwork, right? A shiny, clean car sells much faster than a grimy one. The same is often true for online businesses.
If your business is over-complicated and cluttered with redundant processes, prospective buyers will have a hard time envisioning themselves running your business successfully.
Removing redundancies and optimizing operational efficiency should be your main focus.
One of the key areas to hone in on is reducing your level of involvement in the business. Remember, simplicity and passive income are huge drawcards for interested buyers. High levels of owner involvement translate into a larger workload for the purchaser.
Create a list of your daily tasks, and find ways to automate these processes. If a process can’t be automated, outsource it.
The extra expense in streamlining your operations will help generate more interest in your business and give you more leverage in negotiating a sale price.
3. Get Your Ducks in a Row
Do you ever let your mind wander and then suddenly think, “Where the heck is my birth certificate?”
Well, it’s time to find your business’s birth certificate. I’m talking about your registration documents, certifications, trademarks, employee contracts, and so on. Collating these documents early will save you a lot of time and stress as you progress further down the rabbit hole that is the sales and negotiation process.
It’s also important to get your financial statements in order. Generating a profit-and-loss (P&L) statement is a good place to start.
A P&L statement is a summary of your business income and expenditure over a specific period. It gives interested buyers an overview of your business’s profit margins and helps them understand how much money they’ll take home every month if they buy your business.
You can include items like your tax returns, balance sheets, and supplier invoices in your P&L statement. This documentation will obviously vary for different types of businesses.
At this point, it’s also worthwhile to create a series of SOPs. Standard operating procedures provide a detailed outline of how to complete certain tasks. This not only helps you train new employees faster but also gives interested buyers a better idea of what time and skills are required to run your business efficiently.
These documents will create a roadmap to help interested buyers perform their due diligence and understand the ins and out of your business.
4. Calculate How Much Your Business Is Worth
Once you’ve streamlined your business and gathered your important paperwork, you’re ready to take the most important step of your exit strategy: determining the value of your business.
Chances are, you already have a figure or a goal in mind, but it’s important to moderate your expectations.
For an entrepreneur, it’s easy to be influenced by the many late nights, obstacles you’ve overcome, and emotions you’ve invested in the business. Overvaluing your business will slow down the sales process as you’ll waste valuable time haggling with buyers trying to talk you down to a fair price.
The various calculations used to determine the value of your online business don’t take these emotions into account.
Valuation formulas focus on the hard numbers, most importantly, your net profit.
A handful of different business valuation calculations are used throughout the industry, but here’s the formula we use at Empire Flippers:
First, we calculate your net profit, then we determine an appropriate sales multiple for your business.
When calculating your sales multiple, we look at a variety of factors, such as:
- Growth trends
- Stability and diversity of your earnings
- Diversity of SKUs/Diversification of traffic
- Trademarks and Amazon Brand Registry
- Strength of your supply chain
- Level of owner involvement
- Business age
- Strengths of your email list and social media
- Number and quality of product reviews
While some of these criteria may seem unrelated, they all speak to the stability and longevity of your business.
The higher your assigned multiple, the higher your valuation. As you can see on our scoreboard, the average sales multiple at Empire Flippers is ∼43x.
This may seem rather higher than the industry average, but keep in mind that while most brokers use an annual multiple, we’ve opted for a monthly multiple. This takes seasonality into account, as well as general fluctuations throughout the year.
Once we’ve determined your sales multiple, we multiply it by your net profit (over a rolling 12-month period) to calculate the suggested sales price of your business.
When you’re in a rush to sell your online business, you often don’t have time to work through in-depth calculations like these. That’s why we created this handy valuation tool to help you calculate the value of your business in just a few simple steps.
5. Advertise Your Business for Sale
Now you know how much your business is worth, but how do you convince potential buyers of its value?
When advertising a business for sale, it can be tempting to hide its weaknesses.
By covering up your business flaws, you’re missing out on the chance to highlight growth opportunities for interested buyers.
Remember, potential buyers are looking to put their own stamp on your business and elevate the successes that you’ve already achieved. Presenting them with a flawless business doesn’t give them much to work with.
Transparency about the business’s areas for improvement allows buyers to identify missed opportunities that they can leverage to grow your business further.
If you decide to sell your business through a broker, hiding the negative aspects of your business won’t fly because certain brokers, like Empire Flippers, thoroughly check your business before agreeing to list it.
The vetting process differs from broker to broker. Some brokers don’t vet businesses at all; others use a rigorous set of checks and processes. Here are some insights into how we evaluate businesses.
The Empire Flippers vetting process
First, your business goes through a process called the “5-minute check.” Our vetting advisors screen your business to ensure that it meets our minimum requirements. These requirements include at least $2,000 per month in net profit and a steady track record of at least 12 months of revenue/earnings.
If your business successfully passes the 5-minute check, it moves farther down the funnel into the “in vetting” queue. Our vetting team then closely examines your business finances and paperwork and generates a P&L statement. This aims to ensure that your net profit, cash flow, and liabilities have been accurately recorded and that your business is sustainable.
We do this to protect buyers and ensure that only the highest-quality businesses are listed on our marketplace. This gives buyers a greater sense of security and makes them more willing to make a fast offer on your business.
6. Negotiate a Deal With the Interested Buyer
You’ve listed your business for sale. Now the offers are pouring in. The hard part is over, right?
Wrong. Negotiating with potential buyers can often be the trickiest part of the selling process and a step that many business owners underestimate.
Before you talk one-on-one with an interested buyer, run through some of the common questions that buyers ask and any important information and highlights specific to your business.
You need a clear picture of the ideal terms and deal structure that you would like to negotiate. Having a good idea of the types of offers you will and won’t accept will help you dismiss time wasters and negotiate a sale faster.
Consider factors such as:
- How far below your asking price are you willing to go?
- Are you willing to negotiate an earnout or seller financing?
- Would you be willing to sign a non-disclosure agreement (NDA)?
Sales negotiations are two-sided conversations, so don’t forget about the buyer’s wants and needs.
Buyers are typically looking for a business that will provide them with a solid ROI and complement their skill set.
If you want to create a deal structure that a buyer simply can’t refuse, pre-empt the buyer’s goals and tailor your deal accordingly.
Remember, negotiations aren’t about winners and losers. The art of a successful negotiation lies in achieving both the seller’s and the buyer’s objectives.
7. Transfer the Business Assets to the New Owner
Congratulations, you’ve successfully sold your business! All that’s left is transferring the business and its associated assets to the new owner.
If you’ve sold your business through a private sale, the responsibilities of this task rest on your shoulders. (Yes, yes, I know, the hard work never ends!)
Transferring the ownership of your various business accounts is not always as simple as changing the account credentials. You also have to take into account those pesky terms of service and security systems.
Since your primary goal here is to secure a quick sale, the last thing you want is to be temporarily locked out of your accounts, or worse, have them frozen.
This is an area where selling through a broker like us can really pay off. The Empire Flippers’ migration team handles the process for you!
The migration of your business assets is the final hurdle between you and the payday you’ve worked so hard for. For this reason, sellers often chomp at the bit to get the migration over and done with.
As experts in this field, our migration specialists possess the skills to complete the migration process quickly and seamlessly, while you sip Mai Tais on the beach and enjoy your windfall of capital.
Make a Profitable Exit, Quick as a Flash
Faster than a speeding bullet, it’s a bird, it’s a plane – no, it’s the sale of your business!
That might be a slight exaggeration, but if you follow these 7 steps, you’ll significantly speed up your exit.
Sure, there may be faster ways to sell your business than the options outlined here, but you’ll likely sacrifice security or profits for speed.
While a brokerage or an online marketplace may seem like a non-essential middleman, it provides you with a layer of protection and takes many trivial tasks off your plate. This gives you the time and peace of mind to focus on your next exciting business venture.
If you’re ready to get the ball rolling, set up a meeting with our expert sales advisors to discuss the next steps toward your profitable exit.