Online businesses offer a number of benefits to business owners and investors. A lack of a brick and mortar store means you do not have a big list of fixed costs that you have to meet, freeing up resources that can be used to grow and streamline the business through market research, promotional offers and better product-market fit.
There is an increasing trend of Online businesses being built not so that the owner can run it for the rest of their lives, but instead with the aim of providing the entrepreneur with a successful exit, through being acquired by a larger business or investor. These buy up promising small businesses and help them grow into a more holistic, full-fledged operation. Of course, many entrepreneurs do still stay on after acquisition and benefit from the experience that the acquirer brings. Now, If you find yourself thinking ‘Should I see my online business?’, then this article is for you. While selling an online business can be extremely profitable, there are oftentimes a number of complications and unexpected happenings that can arise, which you should be aware of.
Table of Contents
1. Changing Consumer Trends
While pondering the question ‘Should I sell my online business?’, you should ideally first also ask yourself whether the online business you are building is in line with consumer trends and what consumers want from the businesses they interact with online. This is especially true for online businesses that are into retail. Consumer trends and preferences change quickly, and it is imperative that you ensure that your business is continuing to stay in line with the same.
Selling an online business can take some time, and you could find yourself in a position where consumers begin to gravitate towards something while you are still working out the details of the deal.
This will make “sell my online business” exponentially harder, as investors are looking to buy businesses they believe will flourish in the future.
2. Break down of Trust
Trust is extremely important with any relationship, but with deals where finances are involved, you need to be able to trust the investor that is looking to buy your online business. Similarly, they should be able to trust you. If you are looking to sell your online business, therefore, ensure that you can trust the investor buying your company and that you, in turn, are able to earn their trust. Trust can sour quickly, and so a breakdown in trust can make the negotiation phase a lot trickier and time-consuming.
For instance, investors could oftentimes request access to the source code for your website, which is essentially the backbone of your online business. Ensure that the code is being taken to validate your credibility, and not for the investor to gain a benefit without rightfully compensating you for the same.
3. Due Diligences
Investors that you are looking to sell your online business to will carry out a number of investigations and inquiries into your business known as ‘Due Diligence. This can be done either to ensure that your business is credible and that you are offering what the company is looking for.
Lets say you have the question- “How to sell my online business?”, you should ensure that you are presenting investors with all relevant information about your business, including your background, your business growth, your financials, your projections and plans for the future etc. Should the Due Diligence uncover something material that you had not conveyed, it can sour negotiations for you.
4. Introduction of a third party
One unexpected thing that can happen when you are selling an online business, is the introduction of a third party into the deal. This could be in the form of another investor, looking to co-invest, or providing you with a better offer. It could also be in the form of a mediating agent, a neutral third-party hired to streamline negotiations and facilitate the closure of the deal.
The former can be a good thing for you. It shows that your online business is in demand and can help you get better valuations and terms. The latter can also be good, so long as you trust that the third party is neutral and will help smoothen any rough spots in the negotiations.
From the point you think, ‘I need to sell my online business’ to the point where you feel ‘Did I choose the right buyer’ there are a lot of stages, there are a number of other things you should keep in mind as someone incubates their online business for it to be sold to an investor. As an entrepreneur, a lot of happenings during the selling of a business can be overwhelming because you do not expect them. This article attempts to help negate some of the uncertainty, by telling you about some unexpected things that can happen when you want to sell your online business.