How to Sell Your Online Business (6 Common Mistakes Sellers Make)
Can you imagine making a mistake that could cost you hundreds of thousands of dollars or even up to a million? Now I’ve seen a lot of sellers make huge mistakes when selling their online business. I will teach you the six common mistakes I see from sellers from selling their online businesses. Now you’re probably wondering what I know about online businesses, and I’ve helped broker more than 120 million dollars worth of online businesses. Today, I will talk about everything I’ve learned and the biggest mistakes I see from sellers when exiting their online business.
Now let’s go ahead and dig into number one. Not knowing your numbers is the biggest mistake I see whether you have an Amazon FBA business, an e-commerce business, or a saas business, it doesn’t matter; I talk to a lot of sellers, and I’ve seen a lot of sellers who just don’t have a full grasp of their numbers I’ve even met one guy who did their accounting on fiverr.com. It completely wrecked their business, so make sure that you’re investing the time to either knowing the numbers yourself or having your bookkeeper or a CPA walk you through the figures, and again, growing a successful business, you’re going to need to know the exact numbers of your profit and loss how you’re making money what expenses are being charged to you.
When you’re doing this, you’re not going to be able to sell your business unless you have your books in order. Especially if you don’t have a really strong grasp on how you’re earning money and how your expenses are handled, you really need to understand this and have these numbers together. Without this knowledge, it’s going to be really hard to determine an accurate valuation of your business. Again, this valuation will only be as good as your numbers, so if you don’t have accurate numbers, it’s going to really vary, so make sure you have your books to hire and find a really reputable and good bookkeeper they’re worth every penny.
Moving on to number two, the second biggest mistake I see is not having a firm bottom so when you get your business listed. You get the valuation to make sure you have a strict bottom after all the fees after everything taxes like that, make sure you kind of have your bottom number and make sure that it’s within reason if you’re listing your business for half a million dollars there’s not a good chance that you’re going to get six hundred thousand dollars and walk away with that after taxes and fees, so have a realistic bottom I would say if your business is valued at a certain number, I would say maybe 10 to 20 under that is a good sort of number to have you need to have some room to negotiate again you don’t want to be turning down buyers for you know small percentage adjustment for if they do give you an offer that’s five to ten percent under the list price.
Again that’s a fairly normal thing, and you need to have some give and take when negotiating and selling your business, and this moves on to the third thing again. When you’re in that negotiation process, it can be really disheartening when you’ve kind of worked with a buyer, and you think it’s a really good fit for them to acquire your business, but for whatever reason, after they’ve done their own due diligence, they end up walking away from the deal. I’ve seen a lot of sellers kind of get demotivated after this, and this is my biggest tip to make sure you have the mindset that there’s going to be a lot of buyers you’re going to have to invest some time into this. They don’t necessarily have to disclose their reasoning for walking away from a deal again. Just don’t take it personally for whatever reason. They didn’t see as much benefit or potential in this business, or just things weren’t aligned with their budget.
So a lot of times, buyers will walk even after you’ve had a good conversation with them they’ve even made an offer until the money’s in the bank don’t celebrate moving in tip number four is one of the biggest mistakes I see is that sellers wait until the business is on a downward trend a lot of people have this misconception that they don’t why would you sell a business on an upward trend, but it’s much easier to sell a business as profit is increasing over month over month and year over year. It’s much harder to sell a declining business because people want to buy an asset on an upward trend like stock. Like any type of investment, they want to find the right time and make sure that they can accelerate that growth after acquiring it.
So make sure you don’t sell your business when it’s going downward try to build it up, try to stabilize it even if it’s flat that’s going to be better than a month over downward trend number five I’ve seen this number of times people go to list their business, and once they have it listed they just completely stop doing they stop managing the business they stop growing it they stop ordering new product inventory, and this is one of the worst things you can do when selling your business. You need to make sure that you’re running your business like it’s normal just kind of forget about that it’s even being sold make sure that you’re doing all the day-to-day tasks and keeping everything at normal on the other end of the spectrum make sure you’re not doing any sort of experimental changes changing the website changing adding new products again just try to keep things normal it might be a two to three month period while you’re doing this.
But make sure your day-to-day operations are normal and make sure that you’re not going to be doing any sort of crazy marketing expenses or advertisements that are going to throw off your profit and loss statement and really change the valuation of your business, so that’s number five and number six is to use a broker or to talk to somebody who has experience in the industry, and again I’m going to leave some details below in the description if you want a free buyer or seller consultation, I’ll leave my details below on how you can schedule one of those with me I do provide a free service to help sellers exit their business and make sure that when they go to sell, you’re going to get a lot more valuation for your business. Some of my 30-minute calls with sellers have resulted in them getting hundreds of thousands of dollars or more in their exit. It’s definitely worthwhile again if you made it this far. Make sure you smash the like button, also hit the subscribe button, and make sure you turn on the notifications to get alerted about the two new videos I’m releasing every week. Take care and have a wonderful rest of your day.
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More About This Topic:
- Don’t Sell on a Weak Market
- Don’t Sell to the Wrong Buyer
- Don’t Sell Too Early
- Don’t Overprice Your Business
- Don’t Let Your Business Sit on the Market Too Long 6. Make Sure You’re Prepared to Sell
You should always make sure that you are prepared to sell your business before you start looking for a buyer, and that means understanding your company’s financials inside and out, as well as knowing what your business is worth in today’s market and how much money you want to make from the sale of your company. .To do so, you should start by looking at your own financials and understanding how the business is performing. If you do not already have a financials package, create one from scratch. .Once you have a financials package, an important first step is to find out what your company’s current value is, as well as its future potential. Next, calculate what you think it could be worth in the near future and in five-years or ten-years. In addition, calculate how much money you want to make from the sale of your company.