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Selling an Amazon FBA Business: 12 Mistakes To Steer Clear From
By Quiet Light
Selling an Amazon business is not exactly the same as selling any other online business. Amazon FBA business has a unique business structure and often entails a high market value.
To get the best payout for your hard work and ingenuity, avoid these common mistakes:
- Not having an exit plan
- Not hiring professional help
- Ignoring the fine print
- Not being prepared to sell
- Poorly maintaining your finances
- Only keeping one record for multiple channels
- Using cash accounting
- Incorrectly valuing your business
- Omitting challenges from the marketing materials
- Choosing the wrong buyer
- Automatically accepting an offer from an FBA roll-up firm
- Not preparing for due diligence
Common Mistakes to Avoid When Selling an Amazon FBA Business
Not Having an Exit Plan
Selling an Amazon FBA business involves a lot more than just listing your business for sale. There are several instances in which it may be tempting to bow out quickly, but taking the time to address every step in the process will ultimately pay off.
“Selling an Amazon FBA business involves a lot more than just listing your business for sale.”
Not Hiring Professional Help
Running a successful Amazon FBA business takes a lot of skill. However, the expertise involved in selling a business is a bit different. Hire a qualified business broker and a business lawyer to make the selling process as smooth and successful as possible.
Ignoring the Fine Print
Many FBA business owners do not know that the terms and conditions of Amazon do not allow for the sale of an Amazon Central Seller Account. When you sell your FBA business, make sure you follow the correct process for transferring the Amazon account.
Not Being Prepared to Sell
The process of preparing your business for sale needs to happen long before you list your business on the marketplace. The first step to preparing your business to be sold is to organize and standardize your operating procedures. This includes creating an operations manual for the next owner and getting all of your documents in order.
“The process of preparing your business for sale needs to happen long before you list your business on the marketplace.”
Poorly Maintaining Your Finances
Potential buyers want to see what is happening in your business on a monthly basis. Strong bookkeeping practices and clearly organized documents allow you to optimize your operations and increase business value. Detailed, organized finances allow you to provide buyers with full visibility into your business.
Only Keeping One Record for Multiple Channels
It’s common for Amazon FBA business to sell on multiple channels and in international markets. Each channel must have its own set of records. This allows you to gain insight into the strengths and weaknesses of each channel, focus your energy on channels that are delivering the highest ROI, and make your business attractive to buyers.
Using the Cash Accounting Method
Cash accounting is popular, but it is not the most accurate accounting method, particularly for Amazon FBA businesses. Accrual accounting provides more details and allows you – and potential buyers – to see trends that might be overlooked with cash accounting. If you are thinking about selling, consider switching to accrual accounting for a period of time. It will involve some work, but it will help you improve your business value and achieve a higher selling price.
“Cash accounting is popular, but not the most accurate accounting method, particularly for Amazon FBA businesses.”
Incorrectly Valuing Your Business
The value of your business is based on more than profits. A qualified business Advisor can help you assess factors such as earnings, profit trends, business risks, documentation practices, and additional qualitative factors that affect the transferability of your business.
Omitting Business Challenges from the Marketing Materials
Of course, you want to portray your business in the most attractive light, and the best light is the honest truth. Buyers are looking to learn about the advantages of your business as well as the potential pitfalls. Even if the risks or challenges are hidden from the marketing materials, they will come to light during due diligence. Any dishonesty revealed during due diligence will likely spoil the deal.
“Of course, you want to portray your business in the most attractive light, and the best light is the honest truth.”
Choosing the Wrong Buyer
You may be tempted to sell your business to the first person who shows any interest, but that is not necessarily going to give you the best outcome. You have worked hard to build your Amazon FBA business. You deserve a buyer who will make the transaction as pleasant as possible, and your business deserves a buyer who will maintain and increase its success.
Automatically Accepting an Offer from an FBA Roll-up Firm
If you are thinking of selling your Amazon FBA business to an FBA roll-up firm, you need to first do some research and consider your options. FBA roll-up executives look for FBA business owners who are unlikely to know the true value of their business, and there are many downsides to their offers. Ultimately you will get the most favorable deal if you know the true value of your business and maximize the pool of potential buyers.
Unprepared for Due Diligence
Due diligence is a mandatory part of selling your business. It’s important to have your documentation in order and be prepared to develop a strong working relationship with the buyer during this process.
Selling an Amazon FBA Business with Quiet Light
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