To sell an online business you need to take several steps including getting a broker, establishing a value for your business, marketing the sale and finally closing the deal. Here are some tips on how to sell an online business.
Work with a Broker
A broker will help you establish a value and market your business to prospective buyers. I regularly recommend to business owners looking selling a business that they work with a reputable broker. This recommendation holds true for a traditional brick-and-mortar business as well as with an online business. There are brokers that specialize in the niche market of selling online businesses.
Establish a Value
Typically with a tangible brick-and-mortar business you would use your assets and inventory to establish a value. Determining a price for an online business is atypical. The valuation method used to establish a value for an online business uses the monthly net profit a site generates. This is just a general guide. I have seen some businesses valued at 4-10 times their monthly net profit. Businesses are valued on an individual basis but using the monthly net profit valuation can help you realistically price your business.
You can also utilize market trends from other previously sold online businesses to help establish a value for your business. Online businesses with high valuations typically have the following in common:
- · Revenues that exceed $1,000 per month, most were much higher
- An up-to-date list of members and customers that includes contact information such as addresses
- Operations manuals detailing day to day operations
- Multiple web formats, like blogs or forums
- Multiple domains were included in the sale
Concerning web domains, you can demand a higher price for your website if you have a high ranking PR domain, a domain respected and recognized as an authority by search engines. I’ve seen situations where sites that aren’t overly attractive based on profits sell for more than they are worth because of the domain names they hold.
After establishing a value for your business, you will need to create a prospectus, documentation to support your price. Buyers will want to see how you came up with your asking price.
A broker will market the sale of your business and find you potential buyers. Marketing your online business correctly, will help you locate the right buyer.
Marketing your business will involve several things. First, you need to create a portfolio containing information about your business. Include a business description, identify the competition, and discuss growth and expansion plans. A good portfolio will point out the advantages of owning your business and differentiate yourself from other online businesses for sale.
After you have established a value, marketed your business successfully and have found a buyer the last step of the sales process is to close the sale. Closing the sale for an online business is similar to closing the sale of a traditional business.
I urge you to have your accountant and attorney finalize the details of the sale to ensure all the paperwork is completed accurately.
Taking the above tips into consideration will help you sell your business