Building a digital business can be exciting, but there are so many things to do. You may want to sell your digital business so you can have money to invest in your next venture. If you can build one digital business, you are likely to want to build another business. While you may be good at creating businesses, you might not be great at selling them. In this article, we are going to talk about what to expect when selling your digital business.
Digital businesses have different benefits and drawbacks than traditional businesses and understanding there are going to be differences in how they are valued is important. Traditional businesses have very specific means of being valued, and while digital businesses are getting easier to value, they are not as easy as traditional businesses.
Before you sell your digital business, you should expect you will need plenty of time to prepare. If you aren’t sure what you should be prepared, you can use resources like Digital Exits to find a business broker. Business brokers can be helpful resources when you are selling your digital business, and we will go more into that topic later in the article.
When you think about the sale of your business, it doesn’t pay to be impatient. If you are impatient with the sale of the business, it is likely the buyer will sense your need to sell the business. When buyers sense desperation, they are likely to try to get a lower price on the business.
Like any other sale, you are likely to deal with negotiation from the other side. While you might want to entertain these offers, you shouldn’t waste your time if the buyers aren’t serious. It is important to pay close attention to warning signs that the potential buyer might be flakey. Flakey potential buyers can waste your time that you could be spending finding other buyers that are going to actually buy your business.
Review of Validation Factors
Since digital businesses are different from traditional businesses there are certain validation factors that are likely to be reviewed. Before you put your business on the market, you want to make sure your business has good validation factors so you can get the best price for your business.
Traffic is one of the major validation factors when it comes to a digital business. Without traffic to a digital business, there isn’t much worth there. While there may be some value to the website, that isn’t what is important when buying a digital business.
When buyers look at the traffic, they aren’t only going to look at the numbers. A smart buyer is also going to look at where the traffic is coming from and make sure it is quality traffic. If you try to manufacture the numbers of traffic, it is easy to tell, and this is a sure deal breaker.
2) Financials and Operations
Potential buyers will want to see financials and how your business operates. If your financials are confusing, you need to have them normalized. Speak with your accountant and ask them to help you get your financials in order so you can display the information as clear as possible.
The way your business operates is another area of concern for potential buyers. They are likely to be more attracted to a business that is simple to operate. If you aren’t sure how to lay out your operations in an easy to understand way, you might hire a technical writer to help you do so.
Working with a Professional
When you are selling your digital business, there are likely to be surprised that come up when you are preparing your business. There are technical things that need to happen, and other legalities that you need to know about and a business broker can help you through each part of the process. If you try to go through the sale of your business on your own, there could be challenges that happen that you aren’t sure about how to deal with them.
Business brokers don’t usually charge upfront fees so that is usually a relief for business owners that might be a little low on cash. The typical fee for selling a business is 10% of the purchase price, but this can vary from broker to broker so make sure to ask them about the fees before you decide to work with them.
When you are hiring a business broker, don’t be afraid to ask for references. If they are a working broker, they should have plenty of happy references that are glad to give them a recommendation. If a broker doesn’t have recommendations, you should be concerned about their lack of experience. You should also make sure the broker has experience in selling digital businesses and not only traditional businesses. Traditional and digital businesses are very different and require different skills when selling them.
Now you know more about what to expect when you are selling your digital business. Your digital business can be sold for a good amount of money, but you need to make sure to be diligent when you are going through the sales process. Having a professional to help you go through the process can keep you from forgetting important parts in the sales process as well as after the sale takes place and you are transitioning your copy to the new owner.