You’ve worked hard to build your business. You found the perfect niche, and then you developed a strategy for growth that’s working. While you’re making money now, the ultimate payoff will come when you sell the web business. Your company could be the next Internet business selling for a million-plus, but only if you’re smart about how you sell that online business.
1. Start Early. The best time to start thinking about selling your business is well before you actually plan to list it. You want your business to be in the best possible financial situation when it comes time for the sale, and that often requires advanced planning. If you anticipate wanting to sell your web business within the next 3 years, talking to website brokers now can help you determine how to position your business and manage it to ensure the highest selling price.
2. Put a Plan in Writing. When you were gearing up to launch your business, you put together a business plan to guide you through the process to ensure your success. Now, it’s time for you to write an exit strategy. Committing the details to paper will give you a guide to follow and a step-by-step plan to ensure that you cover every base and potentially realize your sale price objective. Consider things like how you’ll compensate your top employees, how you’ll ensure a smooth transition and how you’ll be involved with the business after the sale.
3. Beef Up Profitability. The number one thing that will determine the selling price of your business is profitability. It does matter the future potential of the business but the overriding factor is historical profitability. Valuations are based on actual historical numbers, not future predictions. While you may be able to coax a little more out of a buyer based on potential if you have a savvy broker, you won’t be able to sell a business for $1 million-plus when the valuation drives a $500,000 sales price. If you’re not showing the kind of numbers that you need to get that million-dollar price tag, rethink your strategies and incorporate new procedures and marketing strategies to improve your profitability now.
4. Fix What’s Broken. You know your industry, and you know what it takes for success. Perhaps you can clearly see that small problems or inefficiencies in your business will take minimal effort to fix and shouldn’t be an issue for the buyer. That outlook is similar to a professional contractor who owns a home with a few minor roof leaks, a couple of cracks in the plaster and squeaky hardwood floors. He can see how those problems could be fixed with ease and assumes a buyer would see it the same way. The only problem is that the buyer is a dentist who has no idea how to fix those problems. All she can see is that the house needs work. Do you think she’ll be willing to pay top dollar for it? More than likely, your buyer is not going to be an industry insider. He or she will be looking for a business that can be taken over and run without major fixes. Change what’s not working and make those necessary improvements now to increase your chances of a million-plus sales figure.
5. Prepare to Be Audited. Your financial records are going to need to be impeccable if you want to be able to sell your business for $1 million or more. Financials for sales of that size will typically need to be professionally prepared by an accountant prior to the close of a deal. That means that you need to make sure everything is in order now.
6. Consider All of Your Assets. When you actually begin the sales process, you’ll put together an Information Memorandum that outlines all of the information about your business. Many assets of an online business aren’t tangible. Your site traffic, social media following and online reputation are all assets that can help make your business more attractive. As you prepare to sell, look for ways to improve the value of these assets as much as possible, so your Information Memo can truly wow.
If you want to sell a million-plus online business, it’s smart not to try and go it alone. Internet business brokers can help you maximize the valuation of your business and find the qualified buyers that can afford your asking price. To learn more, contact us today and set up an appointment to talk to one of our online business brokers.
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