Chapter 13: Sell Your Store?
This probably goes without saying, but selling your store is NOT a "required" step in the Store Coach process. There's no reason you can't continue to operate your store for years and years... or decades! In many (probably most) cases, your best option is to outsource the most time-consuming, low-level tasks you don't want to do (or don't have time to do) yourself. Outsourcing non-critical tasks (as we just discussed back in Chapter 12) and moving into a more passive ownership role is usually preferable to selling your store. While selling your store does give you a nice "pay day," it also means saying goodbye to your monthly recurring income (which you will have to replace). But since there are several scenarios where selling your store makes sense, we want to help you get as much money for it as you can. That's what this chapter is all about.
Here are some completely justifiable reasons you may decide it's time to sell your store:
- You need a large lump sum of money to make a big purchase or to pay off a debt
- You want to spend your limited amount of time on another store or a different opportunity
- You don't have any time to work on your site (and not enough profits to outsource tasks)
- The customers in your niche are particularly obnoxious, and you've run out of patience 🙂
- Your supplier is a pain to work with, and you can't find a better one
- Some other personal reason
As a general rule of thumb, you can expect to get somewhere between 18-36x the monthly net profit for an eCommerce store. Obviously, this is a pretty big range. What determines where your store will fall in this range? There are several factors that will push the value up and several that will push the value down.
Factors that will Increase Your Store's Value
Here's a list of factors that will typically push your store's value into the higher end of the 18-36 month range:
- Well-established store (12+ months old) with lengthy earnings history
- Consistent sales pattern over a long period of time
- Good mix of traffic sources (not completely dependent on one type of traffic)
- Good organic rankings (with several keyword phrases ranking on Page 1-2 of Google)
- Positive organic traffic growth pattern
- Strong backlink profile (to reduce the risk that a Google algorithm update causes organic traffic to plummet)
- Barriers to entry (i.e. difficult/expensive to enter the market or to establish a supplier account)
- Manufacturer(s) have and enforce MAP pricing (which protects profit margins from "price wars")
- Bright future for the market (i.e. demand trending upward)
- Large mailing list with the potential for repeat customers
- Doesn't require much time to run the store
Factors that will Decrease Your Store's Value
This isn't rocket science (since you can basically just take the opposite of each of the factors listed above), but here's a list of factors that will depress your store's value:
- Young store with only a couple/few months of sales history
- Inconsistent/sporadic traffic and sales
- Little or no established rankings (little or no Page 1-2 rankings)
- Declining traffic/sales in recent months (especially organic)
- Sketchy backlink profile (which may result in getting penalized by Google)
- Competitive market with little/no barriers to entry
- No MAP pricing to protect profit margins
- Dwindling market with downward-trending demand
- Small mailing list and/or the type of product that isn't conducive to repeat business from prior customers
- Lots of time required to run the store (relative to how much profit it generates)
To be 100% honest with you, I wouldn't recommend selling your store on your own. You certainly can do it by yourself, but you almost for sure won't get "top dollar" for it. Unless you have an established track record of selling sites and a strong seller profile (with lots of positive feedback), you simply won't get as much for your store as it's worth.
Buying a website isn't like buying a house. Prospective buyers can't walk through it and compare it to dozens of highly similar houses on the market in the same geographic area. Website properties are very unique, and there are a lot of inherent risks involved for the buyer. That's why buyers feel much more comfortable (and are therefore willing to pay more) buying web properties from a broker. Plus, a broker will simply prepare a much better sale listing than you will be able to put together and do a better job managing the auction and negotiating with potential buyers.
So, all that being said, if you do decide to sell your store on your own, either on Flippa.com (10% final value fee) or on FreeMarket.com (5% final value fee, but far less traction & buyer activity than Flippa), read the Pro's Edge box below for advice on how to do it.
Pro's Edge: Advice for Selling Your Site on Flippa
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You'll typically get a lot more for your store selling through a broker, even after paying the broker's fee. Brokers assist you with preparing a professional sale listing, have large mailing lists of people looking to purchase websites and boost potential buyers' confidence and trust.
If you're thinking of selling your site, we invite you to check out our website brokering service. To date, we have a 100% success rate selling income-generating eCommerce stores (many of them for absolute top dollar). With our massive 20,000+ person member's list, and relationships with brokers who represent thousands of additional qualified buyers, we have the connections needed to sell your website for the highest possible amount.
Here are a few quick highlights about our brokering service:
- We generally get at least 50% more for your online business than you could get selling it yourself
- Zero up-front fees (many brokers and marketplaces charge $299+ to "vet" your website before listing it)
- We handle everything, from up-front due diligence to creating the listing to corresponding/negotiating with potential buyers
- We handle escrow for you at zero cost (services like Escrow.com charge hundreds to thousands of dollars for this)
Even if you choose not to use our website brokering service to sell your store, we strongly recommend using a broker. Selling a valuable website property is NOT a DIY project, even if you're a DIY kind of person. The increased sale price will almost always cover the broker's fee you'll incur... plus a whole lot more!