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How to Prepare Your Business for Sale

5 tips for preparing your ecommerce business for sale
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Many variables will influence how much you can ultimately get when selling your e-commerce site. You want to maximise the amount you can get. So, how is that done? How do you prepare your e-commerce business for sale?

 

Staff Contracts

 

A buyer will always want to see the record of the staff contracts they will have to take on. Ensuring that you can provide a detailed record of these contracts is imperative, it will aid a successful sale of your business.

 

Some countries have stringent rules and regulations regarding the transferral of staff contracts. Other countries will have very lenient regulations. Make sure you do some research when selling internationally.

 

The Transfer of Undertakings Protection of Employment (TUPE) law applies to employees and work that has been outsourced or sub-contracted. Make sure you familiarise yourself with any law or regulations before the sale.

 

Supplier Contracts

 

Supplier contracts are another important aspect to address before the sale of your e-commerce business. Detailed records and arrangements will be essential. Legal standings and identity will be affected by a sale, obligations and contracts should be altered where needed. If you need to explain any obligations from a previous contract, consider any of the following methods.

 

Subcontracting performance to the new company. This process will entail clear and reviewed copied of the initial contract. Only then can the decision be made.

 

Novation agreements are signed by all three parties, the buyer, seller and supplier. This way a smooth transfer is achieved.

 

Finally, you can use a notification letter that is sent to all contractors. It will inform them of the business sale and give them the option to end the contract.

 

Clear Financials

 

One way to see the quick sale of your e-commerce business is to get the financial statements in order. Take the time to get those financial records perfect.

 

This will make sure any prospective buyer realises that your business is reliable and trustworthy. Buyers want to see records of year on year growth, new and returning customers, upward sales trends, reliable suppliers and a clean legal history. If you can provide all of this, the sale will be much smoother.

 

Having all this information unorganised will be detrimental. Not being able to represent and account for revenue and expenses clearly will result in a buyer walking away.  If you can’t do this yourself, get a third party company to do an audit, this will pick up any issues. Having good financials will always lead to more money when it comes time to sell.

 

Systems

 

Methods and procedures may not be as straightforward to a buyer as they are to you. Create a detailed guide, so they are ready to take over and run the business. If you have clear systems in place, this will not be hard, you can easily explain the steps to your buyer. Maintain solid communication throughout the buying process and even after the sale.

 

Business Valuation

 

A business valuation is critical before selling a business. Digital Exits specialise in the sale of online business and can evaluate your business prior to selling. Annual profits become crucial when selling your business. Like any business, profits are determined by how much money you have made after you account for all the operating costs.

 

The buyer sets the sales multiple. This is a ratio that describes how much of the profit the buyer is willing to spend to purchase the entirety of the e-commerce business. The buyer will choose the sales multiple based on the perceived risk of investing in your business. The lower the risk is, the higher the number will be. So, presenting an accurate and complete business valuation will ensure the successful sale, improving credibility within the potential new owners.

 

 

 

Taking all the necessary steps will only help you in the sale of your e-commerce business. Leaving out one or more of these steps could hinder the sale significantly. Your business deserves the time and effort to get things right.

27 Jul, 2017
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