Is 2013 The Year to Sell Your E-Commerce Store?
By Dave Slutzkin, CEO, Flippa
Timing really is everything, and knowing when to sell your business means the difference between cutting your losses and having the cash to fund your next big idea. At Flippa, a website marketplace, we see the fruits of well-planned exit strategies every day, executed by savvy business men and women who know when to unload their assets to the highest bidder and start anew. So how do you know when the time is right to sell your e-commerce site? It's a harmonic merger between your business metrics and the market itself. Let's see if 2013 is your year for serious change.
The reports on the current state of the U.S. economy are conflicting, so let's talk about what we do know. According to a new report from eMarketer, e-commerce is now a trillion dollar industry. This year, global e-commerce sales are expected to top out at $1.298 trillion, another 18.3 percent of revenue growth. North America continues to dominate the lion's share, but Asia-Pacific sales are expected to see the highest percentage of growth at 30 percent, equaling $433 billion in sales - and as soon as 2016, this region may actually surpass the U.S. in sales.
With the epic projections in the market, many signs look ripe to unload your store, but consider these factors before you scramble to let your business go to the highest bidder.
Size Up the Competition
Everything from base URLs to full-scale successful Web business go up for sale every day. It's abundantly clear to any serious buyer which sellers have done their homework and which simply wish to unload.
The number one place your due diligence is reflected? The asking price. Scour the Web to find similar businesses for sale, and those recently sold as well. Study not only the selling price, but also the initial asking, all included assets, valuations, services (the whole kit and caboodle). Be very wary of undervaluing your e-commerce store, and equally cautious not to price yourself out of the market. This takes objective research and sincere integrity - and it truly is the key to your success.
Know Your Buyer
A thorough understanding of the demographic you are serving helps you to target all marketing materials and sales proposals to exactly the kind of buyer you need. Remember that it's not just about what you're selling, but also how you present the offering. A balance between necessary metrics and discretion is required, as some details of your business may be better left confidential. Have a solid non-disclosure agreement (NDA) ready to share with truly interested and capable buyers, and above all else, be honest about every last detail. Nothing spoils a deal faster than a buyer discovering a trail of deception does. Treat them just as you would a loyal customer - with warmth, respect and integrity.
Website marketplaces are invaluable in finding potential buyers. Investigate ones with a broad reach and any niche-specific communities that focus precisely on your business's expertise. Don't forget to use the power of social media to get the word out on your sale - friends and family may also be motivated to help you close the deal, so don't be shy about reaching out.
Finally, consider how you will accept payment. Are you offering financing? If at all possible, find a way to do so. The credit crisis is still very real in our economy, and your pool of buyers will broaden significantly if you are able to offer flexibility and payment plans. Consider, too, that it may lessen the tax burden on you if you receive the asking price in installments, spread out over a year or more. Offering financing also justifies an increase in the asking price, so it's truly a win-win.
Issues and Exit Strategies
Before you get ready to sell your e-commerce store, consider your biggest challenges so far. Document problems encountered with any aspect of the business you've uncovered, including marketing efforts, design, user base, retention, SEO and technology. Share why you are selling the business, as serious buyers will most certainly ask. Outline your exit strategy too, including timeline, all documents and materials, software and technologies, art assets and personnel that may or may not make the shift. Gather all expense reports, tax returns, income statements, and related documents in one easy-to-share location. Don't wait for an interested party to ask for these as it may take some time to get things organized, depending on how meticulous you've run the business thus far.
The latest eMarketer report states that the e-commerce industry in the United States will grow from $343 billion in 2012 to $385 billion in 2013. Is this explosion alone enough to spell success to your potential sale? That's a question only you can answer. If you're feeling the itch to move on, the numbers support you - just make sure your business reflects the same, considering all sides and factors. Best of luck on your decision, and may your year be prosperous!