As any founder or business owner knows, there comes a time when you seek something new. Though your established business may still be producing great profit, it just doesn’t excite you as much or you don’t have the creative energy that you used to. When determining whether and how to exit your business, it takes a bit of planning. You’ll need to determine whether the timing is right given all the variables at play. Here are some important questions to ask:
Why do I want to exit?
This shouldn’t be because business is declining or you are losing money, as smart buyers can smell a bad investment from a mile away. In an ideal world, one should consider exiting their business to free up one’s time, take advantage of some needed liquidity, and/or just have the realization that the business may be worth more in the hands of someone else. Whether it be for retirement, buying a house, paying for college, or starting a new career, there are hundreds of reasons why selling your business might be the smart move.
Is the timing right in the market?
No one can predict the future, and no one can time everything perfectly but often we can make general predictions about when to do things. With this, you should consider selling when the economy is doing well, as you will take advantage of much higher multiples – this is intuitive to most people’s thinking since when things are good, there doesn’t seem to be a lot of motive to sell. This is important to note because it’s so tempting to sell when a recession happens and your business’s numbers start to go down, but this is the worst time to sell! Be smart and rethink your exiting timeline to make sure you aren’t throwing away money.
Is the timing right for your business?
Beyond market timing, business timing is even more important. Before you sell your business, many things need to be done to ensure that you can achieve the best price for your business AND the business is in the right state to be transferred efficiently.
The first part of this deals with having to optimize your business so that its numbers reflect its success – this is about trimming expenses, increasing profit, & maximizing efficiency so that you can take advantage of better multiple when your sale comes.
The second part is making sure your business can run without you the same that it runs with you. Many businesses are the babies of their owners and so bad habits develop. An owner doesn’t usually start a business with the thought that they will have to place it in someone else’s hands in the future. To begin to fix this, you must think about hiring managers, outsourcing tasks, etc. That frees you up as an owner to think about higher level issues and the physical work you have is at a minimum.
After thinking through these three points, if everything doesn’t line up, you need to do some soul searching and plan to achieve a sale in the timeline that you need. If you’re lucky and everything lines up to being the right time to sell, you move forward with thinking about how to sell your business and where to find buyers.
Best places to sell your online business:
FIH.com – The International Startup Marketplace
- “FIH.com is the international marketplace – a seed-funded platform to acquire & exit successful online businesses around the world.”
- FIH focuses on remotely managed startups (businesses that can be owned around the world).
- Prefer businesses from $500k-$20M in annual revenue and profitable.
- Full-service listing process where they handle everything from start to finish regarding selling your business (they claim they can do in as little as 14 days).
- Low tiered commission structure from 3-9%
- Global team with headquarters in NYC (CPAs, JDs, MBAs, & developers on staff)
- Application-based process where not every business gets accepted.
- High technology focus with less human contact.
- How to use them:
- Go to FIH.com and apply to list with them using the button in the top right.
EmpireFlippers – The Online Business Marketplace
- Description: “Empire Flippers has helped people buy and sell over $200M worth of online businesses”
- Confidential listing process.
- Large team of a lot of different professions.
- Not a clear physical presence – they are based in the Philippines.
- Higher success fees up to 15%.
- Limited number of listings on their platform.
- How to use them:
- Go to EmpireFlippers and use their ‘Apply to List’ feature.
- Description: “Flippa is the entrepreneurs’ marketplace”
- Allow you to list your business yourself easily.
- Everything takes place on the platform.
- Lots of active buyers on the platform.
- It costs money to list, and it isn’t just for businesses.
- Low verification of sellers (and most buyers) creates a lot of fraud on the platform.
- Need to package the whole listing up yourself.
- How to use them:
- Go to Flippa.com and submit your listing for sale and after paying, it should show up live.
- Description: “Startup acquisition marketplace. Free, private, no middlemen”
- Free and easy to use.
- Thousands of buyers and sellers.
- Easy to get listed and get conversations started with buyers.
- You must package up your business all by yourself.
- Verification & vetting is not done too much by site.
- Buyers and sellers are responsible for creating and managing the deal.
- How to use them:
- Go to MicroAcquire.com and press “join now” to add your business’s information and start the process to get listed.
After you pick your option to move forward with, start with a conversation with their team (or use their software) to see if they seem interested in representing your business. From there, you can list (or apply to list) with their given platform, and you are on your way to get your business sold!