How to sell your eCommerce business

Selling an online business can be an overwhelming process that carries with it alot of uncertainty and requires tremendous patience and trust in the system.

Brad Wayland, of Quiet Light Brokerage, represents sellers and helps them prepare for selling so they can get the maximum return on their sale.

Brad is an entrepreneur who began working in the online space in 2003. He has a wide range of experience operating and marketing online businesses. Brad became friends with Mark, the founder of Quiet Light Brokerage in 2015 and it led to him becoming an advisor.

I want to sell my online business, where do I start?

Brad highlights three aspects of a business that need to be assessed when you’re looking to sell an online business.

Solid financial history for the business for up to three years,
Whether there is transferable value, and
Any risks of the business.

All three aspects help determine the price but also whether or not the sale is even possible.

In terms of transferability and the nuance of which type of buyer it would be of more value to or more profitable for the eCommerce business would need to be sold as an asset sale. If a buyer wanted to purchase the business as a stock sale, they could, it would just change the way a broker would interact with the transaction.

We can help market the business for sale, and help you prepare everything, which is the most important part of what we do. But when it really comes down to it, you know, you're gonna have to sell the whole company. So that becomes a transferability concern sometimes.

— Brad Wayland

He continues:

I think that the internet provides us with this opportunity to sell businesses [in a] much more streamlined [process] than a traditional brick and mortar business. Yes, there's some complication. There's warehouse concerns. There's logistics that are issues. But when you compare it to other types of businesses for sale out there, even the most complex look pretty simple.

— Brad Wayland

Buyers won’t know the business like you do so they need to see solid financials that show promise of a profitable buy. Deals that offer an easy transition and a low price tend to see a faster sale.

While Brad couldn’t speak for his competition, QuietLight works within a typical time frame of 90 days. Their approach is that the timer starts when the business goes live. If they don’t have a buyer in 90 days then they let the seller go look elsewhere.

QuietLight works on the principle of ‘relentless honesty’ which has to do with having the tough straightforward conversation up front. They give honest feedback on what they really the business is worth. Often sellers want to sell for more than the business is worth and then are disappointed when it doesn’t sell.

Things generally sell for what they're worth and so I think we should try to put out there for what we think it's worth, and the market will correct us … we get an unbelievably high amount of our deals sold at asking price or above. It's not because we're under pricing. It's because we're putting it out there at the market rate. If we go over by 20%, there are good buyers that will respond and say, this looks like a great business, but I'm not going to dig in because it's overpriced.

— Brad Wayland

Quiet Light’s strategic approach is to go in as close to the market price as possible and get lots of interested buyers. The sellers are then able to pick from the candidates the one which looks like it's the most sure to close.

Should I keep my business?

The question of whether or not you should sell is one that requires execution with a very level head.

So many people come to me and say, I think it might be time to sell and [often their] reasons for it are circumstantial like, ‘I’m bored, I’ve been doing this a long time and I think I’d like to take some chips off the table.

— Brad Wayland

Brad cautions however that an income stream is more dependable and reassuring than a pot of money. He advises that if you enjoy your business and if they think that the prospects for the future are stable and the prospects for growth are good then never sell your online business.

Just keep it and incrementally improve it and don't ever abandon it.

— Brad Wayland

If on the other hand you are not enjoying the business and are letting it go on autopilot then it probably would be more beneficial for you to have a pot of money because your business won’t last on autopilot.

From Brad’s experience he has found that often when people sell up and get their pot of money, they go searching for a business that will replace what they already had. This is actually one of the reasons that Brad stopped buying and selling because it became such a vicious cycle.

For me it became a vicious cycle of ‘Sold! Here's a big pile of money.’ But now I need to replace that income because I value the income. I don't just want the pot, I want the income. So then I'm just trying to reinvest [the money] and I find myself looking for something like what I just sold. Why did I even sell it? I should have just kept it.

— Brad Wayland

This is the kind of cycle you can find yourself in even if you are selling at higher multiples than you bought for.

Takeaways

If you are going to have a business you should always be in a position to very quickly put together and lay out all the financials for any interested buyer.

You never know every once in a while, we get a moonshot that approaches us.

— Brad Wayland

A business will generally sell for what it’s worth. Don’t over price it.

Connect with Brad

Twitter

Quiet Light Website