If you’re looking to opt-out of the e-commerce business and retire soon, you are probably wondering how to sell an Amazon business. In fact, you might have even already taken some of the necessary steps that you need to take in order to prepare your online business for sale, such as talking to an Internet business broker and even getting a business valuation quote. Even if you’re not exactly close to retirement age, you might be thinking of your online business as your “ace in the hole”; when the time does come that you’re ready to actually retire, you can sell your business quickly and fetch enough money to be able to fund your retirement and feather your nest egg comfortably.
Hold Your Horses, Not so Fast
Despite all those stories floating around on the Internet about people who are able to make tremendous amounts of money by selling their Internet business – and that’s not even counting the ones that have shady sides to them – what most of these stories don’t mention is that selling an online business can be a long and arduous process. In fact, while many people are counting on the value of their business as a reliable predictor of how much they will be able to profit once the sale goes through, only around 17% actually analyze the market and identify potential buyers.
These same people also fail to take into account current market trends. Market conditions will greatly influence both the capacity and willingness of buyers to purchase an online business. If the economy is struggling, many potential investors won’t take the risk of buying e-commerce companies, even ones that are well-established and have great numbers on paper. What’s more, struggling market conditions may make it difficult for these buyers to find third-party financing, even if they are willing to buy your business.
What Factors Should I Consider?
Here are some of the questions that you need to ask yourself before considering selling your Amazon business:
1. Is My Product Really Desirable?
This is the most basic question that you need to ask yourself: do people really want to buy my product at any given time? You should consider how much your product’s value is tied up in market trends, consumer desirability, and time constraints. For example, fidget cubes were once hot commodities on the e-commerce market and companies that sold them during that period made a killing, but after the fad passed, most of these same companies experienced a precipitous drop in their revenue.
2. How Much Value is Tied to ME?
Is your business a “one person” company? This does not necessarily mean that you’re the only person operating it; it means that much of the value stems from the fact that YOU are part of the company. Once you have handed over the reins to another person, will your company still have the same consumer loyalty and traffic? Or is that loyalty based on the brand stemming from your presence?
Many small companies are successful mainly because of the person owning the company because their ideas or charisma is the biggest driving force of the business. Once that person is gone, the company isn’t nearly worth as much.
3. How Much is My Business Worth, Really?
Although you may have already gotten a valuation for your business, this does not necessarily translate to the amount that a buyer is willing to pay for your company. It doesn’t really matter how much time and effort you put into building the business; sweat equity doesn’t mean anything to a buyer.
The hard truth is that your business will only be worth the price that you’re willing to take for it AND the price that a buyer is willing to pay.
Have a Safety Net Ready
There’s an old adage about the risks of putting all of your eggs into one basket, and if you place all your retirement hopes and plans into the sale of your Amazon business, you’re basically a walking example of that saying. No matter what your Amazon business is worth right now under current market conditions, you should still have a plan B in place just in case something goes wrong.
One possible way to still have some financial security is to negotiate partial terms with a buyer. You can leverage your skills, experience, and business knowledge in your particular industry to act as a consultant once they run the business. This way, you can still earn a small percentage from the Amazon business even if you no longer own it.