Contrary to popular belief, it’s not exactly easy building an online business. If you’re reading this article, you probably already know that though. If you’ve made it to the point where you’re thinking about selling your successful online business, your next step is to decide whether you want to list it with a broker, or sell it independently. Unless you have deep industry contacts (or already have a buyer lined up), it’s generally recommended to use an internet business broker.
Getting involved with an internet business broker can seem complicated. What percentage of the sale will go to the broker? How much are they going to sell my business for? How are they going to value my business? These are all completely valid (and necessary) questions. Luckily for you, that’s exactly why we’ve created this guide, to help cover your bases and get you fully prepared to start the selling process with a brokerage.
Benefits Of Working With A Broker
The only reason that internet business brokerages exist is to help entrepreneurs sell their digital businesses. Internet business brokers provide many of the same services as their real world counterparts, just tailored for the digital business landscape. Brokers alleviate much of the associated stressors of trying to sell a business independently. They handle nearly all of the work, in exchange for a percentage of the final sale. Below are some of the top reasons why you should consider using a broker:
- Brokers have industry contacts and access to large pools of interested (and motivated) buyers
- Selling an online business can be a full-time job if you’re doing it independently. Brokers take (most of) the stress/work out of the equation for the owner.
- Selling a business can be very complex, on both the business and legal side of things. Brokers have established procedures for handling every step of the selling process.
- Brokerages have many years of experience in negotiation. Often times, you’ll get a much better price by using a broker (rather than trying to sell it independently).
1. Internet Business Valuation
One of the most important aspects of selling your business, whether you’re using a broker or not, is the valuation process. If your business isn’t valued properly, it’s not going to be sold for the proper price. This is why it’s essential to use a respected internet business broker that can give you a fair, realistic valuation.
When you’re dealing with a broker, you need to directly ask them how they’re going to value your business. You can probably read about their valuation process on their website, but it’s always helpful to hear from one of the actual brokers how they plan on providing you with a thoughtful valuation.
Most internet businesses are valued according to their net profits (minus expenses). That’s obviously a vast oversimplification (for the sake of time), but it’s essentially how any valuation will work. When you’re talking with a broker though, always ask them for a detailed report of exactly how they’re going to complete the valuation. You shouldn’t have any misgivings about how the brokerage is going to approach your business’s valuation.
2. Use an Experienced Brokerage
eCommerce (and online business in general) are relatively new industries. It’s important to use a broker that isn’t new to the scene. You should choose to partner with a brokerage that has more than a few years of experience in selling online businesses. One of the top internet business brokers is websiteclosers.com (with over 20 years of brokering experience).
Ask potential brokers about their transaction histories. How many sales have they successfully brokered? What type of digital businesses have they sold? It’s vital to choose a broker that has experience relevant to your specific industry/niche. For example, just because a broker has sold 500 fashion eCommerce businesses, doesn’t mean that they’ll be the right choice for your construction equipment company that sells its products on Amazon.
3. What Percentage Of The Sale Will The Broker Take?
Although different brokers will have different pricing structures, most brokers will take anywhere from six to fifteen percent of the total sale. The actual percentage that they will take depends entirely on your business, your industry, the specific broker, and whatever contract you signed with them. The larger the business/site, the lower the percentage will be. If your internet business is on the smaller side, you can expect a larger percentage (just because smaller businesses can be more difficult to sell).