The episode was sponsored by my “Video Retargeter” at http://www.VideoRetargeter.com
A lot of people have asked me about selling companies lately, so I thought I’d dedicate an episode to it. If you are interested in selling a company now, at some point, or plan on having an online business in the future, this is for you.
I feel I’m “qualified” to talk about this since I’ve sold several types of businesses in the past. I’ve sold membership sites, a service company with 120 employed contractors, smaller niche sites, and software companies.
That said, I am speaking from my experience only. I know that different people might have different suggestions and might even completely disagree with what I’m about to say, especially regarding selling prices.
Why would you want to sell a company?
There are all kinds of reasons someone might want to sell a company. Here are just a few:
- You’re bored and want a new challenge.
- You need funds to invest in something else.
- You need fast cash.
- You like to start things, work on them a little, then move on to something else
- Maybe you’re dealing with a business partnership break-up or divorce
What do investors like to see?
Investors love to invest in companies that:
- Have as much automation in place as possible. Most investors don’t want to buy into a job. The more you can automate things, the better. (We’ll go into more detail on this in a little bit.)
- Consistent income. While this isn’t necessary, many buyers do love to have predictable income versus big spikes and declines. There are other investors who love to jump in early or who like to come in and save companies, but in general, it’s a lot easier to sell a company with consistent income.
- Don’t rely on just one traffic source. An investor might be (rightfully) worried that if something happens to your one traffic source, your company can be screwed. SEO changes all the time, Facebook changes its terms of service a lot, etc, so it’s best to have as much stability as possible among different traffic sources. Learn one source, master it, get it systemized, and then test other ones as well.
- Have a list of things you haven’t done yet. Investors love when you tell them, “Here are all these different ways that you can make money that I haven’t even tried yet.” That excites them, especially if your business is profitable even without those things.
- Offer to help for ‘x’ amount of time. You might say, “If you buy my site, I’ll stick around for three/six/twelve months and answer all your questions. This helps them feel better about getting into a brand new business.
Where can you sell your site?
Some ways you can sell your site are:
- Use a site broker. This type of person generally has a network of investors looking to buy sites. They know what their investors are looking for, so they get your site in front of the most qualified potential buyers. They save you a ton of time in fielding phone calls and emails and generally take a fee for their services. I’ve paid around 5% in the past.
- Go to business selling websites like BizBuySell or Flippa. Personally, I love BizBuySell for higher priced sales and Flippa for cheaper ones. The buyers seem more serious in general on BBS. I use Flippa for sites that are $3k or less. With either site, you would list your business, any assets (like an email list, products, etc), and your selling price. People will then reach out to ask questions and negotiate.
- Look through your network. Mention that you’re selling your business to people who might be interested. One of my software sales was to a friend who I casually mentioned my results to. He was very happy to buy it.
How do you handle pricing + payment collection?
I’ve sold businesses for around 2 years’ net earnings in the past. I know some people will say you can sell for a lot more, but this is just my experience.
After you and a buyer have agreed on a price, you can have a buyer put the money into a third party escrow so that you’re both safe. The money gets released once you send over site details.
What can you do now to make your business more sellable?
Even if you’re not interested in selling your site right now, you might still want to consider taking action on these items. The things investors look for are things that would benefit you too.
- Systemize as much as possible. If you’d like to learn more about this, check out my course here. It should help you get started. Some ways you can automate processes are: spreadsheet out all of your processes, have training videos created for all jobs in case someone quits, set up email autoresponder systems, write customer service scripts, write out frequently asked questions, and so on.
- Work on customer satisfaction. This helps your karma, business stability, and shows your investor that you have a great product.
- Have a strong management team.
- Work on building in consistent income. A quick thing you could do is to look at where you could add recurring offers to your offerings.
This is a general look on how you can sell your businesses.
If you have questions on this, or want me to go into detail on anything, let me know! I’m happy to make more episodes on this or anything else that you are interested in.