Exiting an e-commerce business can be very lucrative – you just need to ensure you are ready to go to market. Let’s start by addressing a few questions in regard to whether or not your e-commerce business is ready to be sold.
- Do you have steady revenue, profit and customers? Sure, you spent thousands of dollars and countless man hours developing the technology, user interface, shipping interface and more, but, unless you have novel technology, there is not much value without cash flow. Don’t be fooled into thinking you have “Unicorn” value just because your e-commerce business employs technology.
- Are you trending in the right direction? If sales are not growing more than 10% annually buyers will be very wary. The retail technology sector is driven by the “sizzle” and you need to show growth to get people excited.
- Do you rank high online? If your e-commerce business sells widgets, is it easy to find your site with a simple Google search? High positioning for major keywords drives sales and can significantly increase value.
- Are your processes in order? A turnkey operation with shipping and logistics completely configured is valuable in the e-commerce sector. This is key to the operation and without it value declines.
If you answered yes to these four questions, the opportunity to sell for a high multiple may be there. If not, it may be best to hold off until your e-commerce business is truly ready or understand that your business may command a lower value until these points are addressed.