When you sell your online business, it is common that you must have either a plan or a roadmap ready for your next steps. However, most often, many tend to forget the phase of planning that goes through before selling the business. There are a few important steps that you need to follow before selling your business. In this article, we will have a look at the 6 most important things you need to take care of before you sell your online business.
1. Gather Your Professional Team
The first and most important step is to gather all of the different professionals in your team. This can help you gauge the different aspects of your business accurately as these professionals are experts in their domains. Make sure that the list of professionals includes your legal team, tax advisors, and business advisors. With this team, you have to make sure that you identify all the best options for selling your business online along with the available alternatives in the market.
2. Find Your Market Value
Once you have gathered your team of professionals, the next best thing to do is to understand the current market scenario and estimate the fair value of your business in the market. It can also be helpful to understand your competitive landscape so that it can act as a metric for you to understand your market value. Meanwhile, it can also be beneficial to ensure that your asking price is just so that a bank or any other business appraiser can validate it.
Finding the market value for your business can usually be a guessing game as it is not necessary to price your business very close to your competitors’. So, it can be beneficial to consider several aspects such as your current performance, past performance, and the potential future performance of your business.
3. Get Your Financials Together
When you sell your online business, one of the most important things that a buyer would focus on is the financials of your business. As there is plenty of spotlight on your finances, it would be extremely beneficial to get your finances right and in order.
You can begin with cleaning and organizing your existing finances such as your cash flow, profit and loss statement, balance sheet, cost of goods, payroll hours, operating expenses, and other financial reports. It would be ideal to work with a Chartered Accountant to get answers to your questions in order and also keep in mind to include your net profits over the last few years.
4. Identify the Right Structure for Your Deal
Ultimately, the best way to get a great deal when you sell your online business is to structure your deal right. There is no single way to structure your deal. The best structure can vary based on several factors such as the nature of the business, the current valuation, the existing revenue, the preference of the buyer, and most importantly personal preferences of the seller. You can also reach out to a broker or a transactional attorney to help you structure your deal the right way.
Depending on the current market and your current financials, these professionals can help you structure your deal right. Usually, 4 types of deals are commonly used – cash upfront, seller financing, SBA financing, and earnout. So, based on the decided structure of the deal, the attorney can help draft the required legal documents to make sure that all the bases are covered for the deal made.
5. Get Your Documents Ready
To initiate or consider any kind or form of deal, the buyer will most necessarily require to see your documents including, the registration documents, financial documents, profit and loss statements, and other required documents to not only provide the required information but also close the deal in an informed and orderly fashion.
6. Have Your Website and Analytics Ready
A few things such as your website, branding, social media presence, and analytics tend to act at the forefront of your business. So, if your website or graphics have not been updated, make sure that you have them updated before you plan to sell your online business. This can not only increase your chances of landing a deal, but it can also help truly reflect your business and its current status.
With the analytics front, make sure that you have all the key data points forecasted and presently in an orderly fashion so that the buyer can thoroughly understand your business along with its performance.
In a Nutshell
Before you plan to sell your online business, it can be beneficial for you to complete a few steps so that you can increase the probability of landing a deal and also land a good deal with the buyer. Some of the steps such as getting your financial documents ready and choosing the right kind of deal structure can involve other stakeholders such as an attorney and a chartered accountant. Moreover, if you are looking to sell your business online, make sure that you follow these steps to have a smooth and seamless process.