How to Sell Your Amazon Business
Running an eCommerce business through Amazon can lead to a flexible and financially-rewarding life. Online retail is a rapidly growing industry, and since these businesses can be run from anywhere, they make it much easier to find a quality work-life balance.
Amazon or FBA, businesses are particularly popular. They make use of the logistical power of Amazon, and through the use of PPC advertising, they can often compete with much larger corporations.
However, as with most things, there will come a time to move on from your Amazon business. You may have a new project waiting in the wings, or maybe you’re simply not as passionate about running the business as you used to be.
But no matter the reason, when you do decide to move on, the best thing you can do is sell the business. This will make sure your business, often referred to as your “baby,” will end up in the hands of someone who wants to make it grow. And selling the business also comes with a nice injection of cash you can use for your next venture, which is always nice.
In many ways, selling an Amazon business is a similar process to the sale of any business. Yet there are a few things that are different you’ll want to keep in mind. Here are a few tips to help you sell you Amazon business when the time comes to move on.
Gather statistics and records
When someone starts looking at your business as an investment, the first thing they’ll want to know is how it’s doing. Potential investors will ask questions about how it’s performing, and they’ll want to see some numbers to back up any claims you make.
So, to sell your Amazon business, the first thing you’ll want to do is track down all the data you have about your business. Revenue figures are important, but since an Amazon business operates largely on the web, you’ll want to make sure you also include information regarding:
- PPC and organic search performance
- Conversion numbers
- Marketing investment and ROI
- Operating expenses
Putting this information together serves several purposes. First, it helps you get an idea of your business’ value. Generally speaking, an online company is worth 2.5 times its yearly revenue. Gathering relevant data about revenues will help you figure out this number so that you can decide when someone is or is not making you a serious offer.
Second, having this data available makes it easy for investors to validate your claims. They aren’t going to just take your word for it when it comes time to submit an offer, and by making these numbers readily-available, you’ll ensure the sale process goes much more smoothly, making everyone happy along the way.
Lastly, this data helps show where the company is headed. Businesses poised for continued growth are simply worth more. Being able to demonstrate consistently growing sales and positive prospects for the future will help you attract better and more lucrative offers for your Amazon business.
Play up your Amazon status
Another thing investors look for when considering buying a business is how hard it will be for them to take over and scale the operation. They’ll want to see what systems and processes you have in place. And you’ll receive better offers when you can demonstrate convince investors it will be an easy transition.
In this regard, you have a distinct advantage as an Amazon business, and you need to make sure potential investors understand this. Amazon is the world’s largest eCommerce outlet. Their logistical infrastructure is unfathomably large and efficient. It’s critical investors understand what it means to run an Amazon business and also how doing so makes it very easy to scale.
One of the things you will present to a potential investor is a Confidential Information Memorandum(CIM). This document details everything about your business. You present it to someone when they’ve shown genuine interest in making an offer and buying the business. Make sure you play up that you’re running an Amazon business. Give some background information as to what this is and why it’s an advantage as doing so will help you secure better and more serious offers for your business.
Get some help with the sale
A critical decision you will need to make when going forward with the sale is how you’ll find a buyer. In general, there are three ways you can do this:
- Sell on your own. This usually entails putting your website up for sale on sites such as Flippa. These online marketplaces make it easy for you to get in touch with buyers, and commissions are small. But they are better for businesses with less than $100,000 in yearly revenues. Furthermore, keep in mind the class of buyer that uses Flippa. Most people searching for investment opportunities on Flippa are looking for a cheap site to buy and “flip” for a higher price (hence the name). As a result, it might be difficult to find someone willing to pay what your business is really worth.
- Business brokers. These individuals, or firms, work much like real estate business. They take you on as a client and use their network and marketing skills to get the best deal possible. For businesses with yearly revenues between $100,000 and $20 million, a business broker is a good option. While you’ll pay a commission for the sale, brokers have a lot more resources available to find a quality buyer who is willing to pay what your business is worth.
- Investment banks. For businesses with over $20 million in revenue, you may want to work with an investment bank to set up an Initial Public Offering (IPO). These are rare, though, and even more so for eCommerce business. Commissions are high, but so are paydays. It’s unlikely you’ll take this route, but it’s good to know it’s an option.
Generally speaking, for Amazon businesses, the best route is to use a business broker. It’s hard to beat the personal touch they provide, and it’s much more likely they’ll find a serious buyer than if you go on your own.
This last piece of advice is relevant when selling any type of business. It’s easy to get anxious and jump on the first “good” offer you receive. But this isn’t always the best offer you can get. Get a business valuation so that you can know for sure what your business is worth, and then be patient. You’ve worked hard to build your company to where it is today, the least you can do is wait to sell until you receive an offer worthy of efforts.