How To Sell My eCommerce Business: A Step-by-step Guide

Looking to sell your eCommerce business? There’s a little more to it than sticking a “For Sale” sign by the curb and serving cocktail weenies at an open house. Or is there?

What’s Driving You To Sell?

Tim Ferriss’ 4-Hour WorkWeek portrayed eCommerce as the gateway to passive income. Perhaps when he wrote the book in 2007, it was easier to “strike gold” online. Unfortunately, since then, the World Wide Web has become saturated with prospectors hoping to strike it rich with passive income.

This means lots and lots more competition for each and every eCommerce cowboy. Running an eCommerce gig is not a four-hour work week for most business owners. If you don’t believe us, just read some of the subreddits for Amazon sellers.

Perhaps this is why one of the main reasons owners sell a business (including an eCommerce business) is because they would like to retire. That means really retire; without having to work. If their business was truly passive, they wouldn’t have to worry about a succession plan. But the fact is that many digital businesses are still a hands-on operation.

Boredom, Burnout, or Both

Such decision-making (e.g., I’d like to retire) accounts for around 43% of business sales. Another 31% of owners are either bored or burned out. These two sentiments on (seemingly) opposite ends of the spectrum represent a whole range of reasons why owners are just not living the dream anymore.

Many people start their own businesses because they want to be their own boss. Alternatively, they dislike the monotonous routines of a 9-to-5 workplace. Let’s suppose they can surmount the marketing hump that prevents many small eCommerce sites from taking off. 

At first, it’s exciting to see the orders rolling in. It’s exciting to pack them, ship them, and post videos of all that excitement to Instagram.

Several years later, the novelty of this routine has worn off. The owner learns that they also have to deal with returns. And competition. And suppliers. And employees. And legal stuff. And taxes. And everything else that comes with running a business.

Is Selling In Your Best Interest?

Some of these business owners are ready to make an exit into retirement. Break out the Hawaiin shirts and golf clubs! Others heave a sigh of resignation and start looking for a “regular” job again. But others dream of going on to a new project.

Some people are just serial entrepreneurs. They start a business, build a strong brand, make profits, sell it, and then go on to the next thing. Did you know that before Elon Musk launched rockets into space and built ugly trucks, he developed PayPal? 

Musk is an example of a serial entrepreneur. Such a business person is not selling their store to escape. Rather, their sale is a sign of success vis-a-vis a completed project.

In this case, selling a business is not a sign of failure. It is a sign of success. The project has been completed and nurtured into a “complete adult.” It’s time to put another bun in the oven…if you know what we mean.

And sadly, for some business owners, none of the above-mentioned reasons apply. The business does just not work out. The truth is that 22% of Amazon sellers are making $500 per month or less. If this was a full-time gig, then they may feel it’s time to give up.

Prepare Your Business For Sale

Preparing your business for sale involves more than just negotiating and closing the sale. You will have to market your business effectively. Your target audience is not your brand’s repeat customers this time but future owners. That means a different type of marketing. Some things will be similar, such as brand building and brand awareness. But, you’d first have to define your brand long before.

However, other aspects will be different. Your customers don’t know about your backend process, your debt, or the dynamics between your employees in the warehouse or office (if this applies to your eCommerce business).

However, a prospective business owner needs to know about all that. They’ll be inheriting your business, so they’ll eventually be seeing how it all works behind the curtain. It’s time to swab the deck and get things ship-shape, as they say on the high seas of the internet.

Streamline Operations and Documents

Some investors love buying properties to “fix up.” Part of it is the idea of a cash return. But part of it is because they love the art of remodeling the home. There is something satisfying about watching the transformation of a property. Putting in new fixtures, appliances, countertops, floors, and everything else is a rewarding, Instagram-worthy task.

The same can usually not be said about business operations. Business processes are invisible, so it’s harder to derive the same satisfaction from fixing them. Most business owners call in consultants to fix these problems for them (if they can). Business owners usually do NOT want to buy a business that’s one giant cluster-funk (sounds like a great name for a 70s band).

If you want to maximize the sellable value of your business, make sure your business processes are as streamlined as possible. What this means exactly will vary from business to business. You may be reluctant to transform certain aspects of the business process if you want to sell the business.

Should I Really Waste Time On Improving Business Operations?

The completion of the sale may be as much as a year away. That is plenty of time to implement changes in the process for the better. If you don’t know what those changes are, you could bring in a consultant to find out. Some of them might involve switching operations to software-based cloud platforms.

These can significantly reduce expenses, especially if they integrate with one another (e.g., inventory and accounting software). Once upon a time, business software was only in the domain of large corporate clients. Purveyors like Oracle and Salesforce have created dozens of industry-specific products and services for businesses like yours.

The other aspect of operations is the legal paperwork. Potential owners do not want to inherit any problems in this area. Is your business an LLC or S-Corp? Do you sell certain products that are subject to legal limitations in certain areas, like wine, tobacco, or vape products? Consult with a lawyer and/or tax advisor to ensure you are current on everything.

Solidify Your Brand on Social Media

There is something in real estate called “curbside appeal.” A home with a nicely trimmed lawn, landscaped hedges, and a white picket fence can improve the property’s perceived value. In fact, consumer reports indicate that “curb appeal” can boost home value by 3-5% or more.

Your eCommerce business’s “curbside appeal” is its social media presence. Is your Instagram account dead? Does your Facebook page scream “throwback jam” without the retro aesthetic appeal? This makes your business appear like a dud to prospective buyers, even before they look at the numbers.

Remember, a solid social media presence builds trust. In fact, so does a solid blog with multiple blog posts per month. It really showcases how much you know and are willing to help in your field of expertise. 

Is Your Niche In An Uptrend?

If you’re going to sell your business, consider hiring someone to improve the look of your social media accounts. This can take a few weeks to a few months to really get going, so don’t expect overnight results. Daily social media posting, hashtagging, and community engagement are all part of making a social page look more robust.

This is the time to get existing customers to crank out some “user-generated content,” or UGC. UGC means that customers post pictures of themselves with your products for free (you are not paying them). You can encourage them to do this by offering prizes for the best picture. Ensure they use a “branded hashtag” and tag your business in their pics.

Pay Down Your Debts

It’s not always possible to pay down debt as you exit the business. However, you should try to pay off as much as possible. The more debt your business has, the less attractive it is to prospective buyers. Loans, liens, and merchant cash advances should all be paid off or paid down so that the outstanding obligations are not burdensome.

In some cases, you may use sale proceeds to pay down the debt you owe. Alternatively, you could arrange for the buyer to take on some of these debts. Either way, you will probably need to be transparent about your debts. Caveat Emptor (buyer beware) laws vary from state to state. However, debts will fit into a discussion of assets and liabilities.

The more assets and fewer liabilities you have, the more valuable your business is. Sometimes, you might even consider using personal assets or loans to pay down business debt to close the sale. Once your business is sold, you can figure out how to repay these loans or replenish the assets you “borrowed” from yourself.

Tell The RIGHT People…Not the Wrong Ones

There is probably no good reason (repeat: NO good reason) to tell your customer base that the business will be changing hands. This will send a signal to your customer base that it’s time to jump ship. Changes in ownership are often associated with the “choppy waters” of new management getting to know the business.

If you tell your customers that changes are coming, you may lose a percentage of your business. This, in turn, can drive down the value of your business and make it harder to sell for the price you want. You’re probably better off just not making ANY kind of announcement.

Can You Sell To Your Competitors?

However, it is perfectly reasonable to quietly and discreetly mention the idea to professionals in your social circle who may be able actually to help complete the sale. You must use some discernment and wisdom to determine what this means. But the right word to the right person could ultimately find your desired buyer.

There is a folktale about a man who dreamed of treasure in a faraway place. We’ll say his name is Fred. Fred traveled there and started digging. A soldier saw Fred and asked what he was doing. When Fred explained his dream, the soldier laughed. He had the same dream about a man named Fred, and a treasure was in Fred’s backyard.

The allegory is clear enough. Sometimes, the things you need are under your nose. Perhaps the next owner of your business could be one of your competitors. If you know this individual personally, why not consider selling your business to them? This might leave a bad taste in some mouths, but other business owners will not be opposed to the idea.

Get a Business Broker

It might be a good idea to get yourself a business broker. These individuals specialize in connecting sellers and buyers, just like brokers in any type of business. In addition to that marketing piece, they can also help you point out things to fix and improve on, such as some of the points listed above.

A business broker can also help line up the legal ducks in a row. They can provide the contracts and paperwork you need to transition the business smoothly and legally. Sometimes, owners and buyers can overlook details that result in a lawsuit. You may think such lawsuits can’t happen in the intangible, international space of the greater interwebs.

But they certainly can. Twitter nearly got into serious legal trouble by facilitating a false activity presentation on its platform. Inflating sales numbers is a common sales device that can come back to bite you. A broker can help you ensure that everything about the sale is squeaky clean and that your backside is protected.

…Or List Your eCommerce Business On An Arbitrage

Just like there are marketplaces for selling products and services directly to consumers, there are marketplaces for selling your business. Flippa and BizBuyZell are two well-established marketplaces. Remember that these marketplaces may charge 5-10% to complete a sale and charge the buyer up to 10%.

However, if you don’t know anyone personally who can buy your business and you can’t get connected with a broker, marketplaces might be your best bet. You can usually purchase additional tools for broadcasting your business to a larger pool of potential buyers.

These sites can also price your eCommerce business very accurately. They have tons of data to work with (from previous sales). They also use the latest AI and machine learning trends to review your business and its activity. Flippa, for instance, can provide you with a valuation in seconds.

The Price Is Right

Someone will need to price your business, and it may not be you (although it could be). An outside consultant, broker, or marketplace can review and value your small business. They can pay attention to details that small business owners may overlook or be biased about.

They can assess the long-term vitality of your business. AI and machine learning models are getting increasingly better at bringing intangible considerations into the valuation, such as brand identity and future potential customers.

Part of pricing your business is comparing it to other similar businesses. In real estate, these are called “comps.” A broker or consultant will do a similar process with your business, comparing it to others in the general marketplace. Of course, they will also factor in concerns like your sales numbers and backend sales processes.

Will You Consult With The New Owner After The Sale?

You are not usually obligated to follow up to ensure a smooth transition after the sale. In some cases, this can get emotionally complicated as well. However, there are some instances in which this might make sense. If business processes require explanation, you may be the best person to explain them.

Sometimes, a business is a family-owned business. It may also present itself to its customer base as family-owned. This sentiment is a little harder to create in the e-commerce space than in the brick-and-mortar space. However, it is very much related to brand perception.

When a family-owned business sells, the owner sometimes likes to stick around and ensure the translation is smooth. This is because the reputation of the family name may be associated with the business, even after it changes hands.

Suppose you are an influential person online (e.g., an influencer) or well-known in a “real” or digital community. In that case, you may consider staying involved during the translation process of your business if the business is associated with your name.

Otherwise, it’s probably time to move on, not only for the sake of making a clean break but also because your consulting skills are worthy of payment. There is no reason you should be giving away free advice or help. You may even build consulting into the final contract price of the business if you are going to stay on board in an advisory role.

So…Should I Really Sell My eCommerce Business?

A funny thing might happen after you start getting your ducks in a row. Cleaning up your back-owed taxes, making sure your legal paperwork is up to date, dusting off your social media accounts, and refining backend processes…you may see your business turn around. If you were selling your business because it wasn’t working out, you might have a fresh perspective on the whole matter.

Additionally, the consultant you hired to improve your business for pricing and valuation might help you see why it isn’t working. Perhaps you need to diversify your customer base. Perhaps you need to make it even more niche. Whatever the case, in the process of selling, you might learn how to improve your business.

Ultimately, the decision to sell your business is up to you. If you don’t want to sell it completely, you can perhaps bring in partners. Another idea, if you need capital, is to get investors. Either way, this means forfeiting some portion of control over your brainchild.

What Does Payment Processing Have To Do With All This

Leave no stone unturned when considering why you must sell your business. If it’s because you’re physically burned out, bored, or want to retire, that’s one thing. If you want to cut the weight of the business and float on up to your next project, that’s another thing. But what if you “need” to sell your business because it’s failing?

A consultant and a tax advisor can help you pinpoint areas where you can trim the fat. For instance, most businesses are overpaying for utilities. Many business owners are unaware of tax breaks and incentives they can take.

And there is payment processing. How much is your eCommerce payment processing eating away at your profit margins? It might be more than you realize. Payment aggregators like Square, Stripe, PayPal, and Venmo usually have flat-rate pricing models. These models typically skim much more off the top than you know.

These flat rates, plus a flat fee, are usually around 2.5% or higher per transaction. It doesn’t matter what type of card your customer uses (Visa, Mastercard, Amex, Discover, credit, debit). Your sales volume does not matter, either.

This type of pricing is fine when you just started on Shopify or WooCommerce. But as your sales volume increases, this pricing type can significantly cut your profit margin.

Have You Considered Switching Payment Processing?

There is a pricing model called interchange-plus pricing, where the fees more accurately reflect the true cost of running a credit or debit card. That’s because credit cards, debit cards, and the different card networks are all priced differently. 

Different prices vary based on the type of business that is collecting payment. Paying 2.5% plus forty cents per transaction, multiplied across thousands of transactions per week, could be something you can change.

If you’re ambivalent about selling your business, this money-changing strategy might just be the thing that changes the game. Let’s review your current payment processing provider and their fees.

We’ll see if you can keep more money in your pocket. You may be able to avoid selling your business. Alternatively, if you want to sell, the improved cash flow will increase the valuation of your business to potential buyers. Let’s connect. Fill out the form below or give us a call.

Frequently Asked Questions About Selling eCommerce Businesses