How to Maximize the Value of Your Ecommerce Business

Boost Your Ecommerce Exit Value

Quiet Light Advisor Ian Drogin shares how to prepare for a valuation call, avoid common mistakes, and boost your business’s exit value. Whether you’re looking to sell this year or years from now, this is the strategic insight founders need to hear. When’s the best time to get a valuation? What will buyers really scrutinize? Should you bother with a business broker?

Learn the steps sellers should take before and during a business valuation, including key documentation tips, buyer FAQs, and how to spot red flags before due diligence. You’ll also hear a real case study where a deal nearly fell through—and how Ian helped both sides create a win-win solution. If you’re running an e-commerce business or any online venture, watch this before you plan your exit.

Here’s what you’ll learn:

• 00:00 – Intro: What this video covers
• 00:35 – Why preparing for a valuation matters
• 01:27 – What to bring to a valuation call
• 03:15 – Common questions sellers ask
• 04:40 – What buyers will want to know
• 06:02 – The 4 Pillars of Value framework
• 07:45 – How timeline expectations shift after valuation
• 09:13 – How bookkeeping increases your business’s value
• 10:32 – Growth mindset and trend visibility
• 12:00 – What to expect during due diligence
• 13:20 – How advisors support you post-offer
• 15:05 – Red flags that can tank a deal
• 16:35 – Case study: A transferability challenge resolved creatively
• 18:15 – Why working with a professional matters
• 20:10 – Ian’s entrepreneurial journey and Amazon business sale
• 22:00 – Final thoughts + how to reach Ian

TRANSCRIPT

00:00 Introduction

[Music] Hey everyone. In this video, you’re going to learn how to prepare for a valuation call. What are some of the common mistakes we see e-commerce sellers making as they prepare to sell their business, what they can expect buyers to scrutinize within their business, some examples of why you should work with a professional to sell your business one day, and learn a little about Ian Drogan, our newest adviser here at Quiet. So, thanks for joining. Thank you, Sam. All right. And you’ve been having, I’m sure, a lot of valuation calls recently. 

00:35 Why Valuation Prep Matters

If if you’re or someone out there watching this is an e-commerce seller and they have a valuation call coming up. What are some things they should do to prepare, can do to prepare to have like a more productive conversation um or some of the things they should come in mind with? How can they prepare for calls? Yeah, absolutely. That’s a great question. So, the first thing would just be to get a clear handle on your financials. So, if you’re able to put together a monthly profit and loss statement, preferably on an accrual basis, you’ll be one step ahead because a lot of the questions that we’ll go into are kind of based around what your financials look like. So, if you’re able to show that, then we can talk about trends, we can go through various line items, we can understand your cost structure in more detail. um the breakdown of kind of traffic sources will be more clear or at least advertising sources. 

01:27 What to Bring to a Valuation

So that will just allow us to have a more in-depth comprehensive conversation rather than have to wait till later to kind of put that together. I I understand that sometimes it can be a bit of a hassle to put together a P&L um right off the bat. So don’t stress yourself out if you don’t have it. I definitely would not not do a valuation call because you’re not at that point yet. But if you already have a bookkeeper keeping records for you, um that would definitely be one thing to do. Um, additionally, just kind of I would say think about what the strengths and weaknesses of your business are. That’s going to be something that we delve into. Um, of course your adviser will ask you more um, pointed questions about different variables, but if you can at least kind of come to the table with a basic like your own thoughts um, about you know kind of what you think are the distinguishing characteristics about your business as well as potential flaws that will also kind of help um, position us for a fruitful conversation. Would you say there’s any super common questions that you get in a valuation um either from the seller or maybe questions that you consistently ask in every single valuation call to a seller? I guess two parts. Maybe we’ll tackle part one first. What are the most common questions that sellers come to you to those calls with? The questions vary quite a bit, but one that is um pretty consistent or at least comes up a lot is are you ready to sell or you know am I ready to sell as a seller? And it’s a really good question uh because depending on where you’re at within your your kind of timeline as a business owner will really inform what the selling process looks like for you and kind of what your your value will be when you sell. So one kind of could call it an exercise almost that I I walk through with a lot of sellers is what alternative paths exist for you besides selling. 

03:15 Common Seller Questions

So selling’s obviously one path, but what other avenues could you explore to um to kind of achieve your goals in the near distant future. So, a lot of these have to do with um what what steps you can take to get your documentation in order to make your business more transferable, if barriers exist in any of those areas, and then also just kind of what untapped opportunities could you pursue in the next 3, 6, nine months or more to get to a evaluation point where you’ll be more satisfied with the exit. So, that’s I mean, again, there’s so many different questions. I’ll just stop there for now. That’s definitely one of the common ones I get. And then is there any um and some of these questions might be obvious, but like when you have a a seller that comes in for evaluation call, what are some of the questions you ask in every single call? Yeah. So, why do you want to sell? And that kind of leads into what we just talked about. Um when do you want to sell if if they do want to sell? Um I I I try to understand the business model. So, a lot of times it’ll really vary based on kind of the kind of business we’re dealing with. So, I’ll want to understand what the business is selling um kind of what the the revenue looks like. Is it all through one channel? Is it diversified? I want to talk about trends. 

04:40 What Buyers Want to Know

I mean there’s so many questions, but I approach it through the lens of the four pillars of value really, which is are growth, risk, transferability, and documentation. really trying to look for how those pillars will apply to a given business. Um, so again, trends, documentation, that all plays into it. Uh, if there’s any kind of vulnerabilities in the business, we’ll want to delve into that. Uh, it’s important to understand not just kind of what makes a business attractive, but what is going to potentially be a concern for buyers because it we we’re we’re going to want to face that head-on. um you know talk about what those challenges potentially are and then what paths exist to kind of overcome those in the future. So from a high level growth risk transferability and documentation um on a granular level it really applies but it those are a couple of the things that we kind of get into. And then I want to go back for a second because you mentioned one of the questions that you ask is when do you want to sell? And I’m curious, how often when a seller comes in and says, “I want to sell on, you know, by X date or in X number of months, does it end up changing by the end of your valuation call or just after a few conversations?” That’s a good question. And it often changes it, you know, not always. 

06:02 The 4 Pillars of Value

But like I kind of said, I think in my answer to your first question is in addition to saying this is what I think the value is. This is the range. Um, and here’s what selling would look like now, here are the other scenarios that you could pursue. So I I try to lay those out and often one of those other scenarios or paths are more appealing to a seller. So for example, if you come to me and and I tell you this is what I expect your business is worth now, but if you do XYZ, I think you have a chance of achieving twice that in 12 months. A lot of times sellers are going to choose to hold on to their business to to kind of maximize value. So it it really varies, but to answer your question quite a bit, it it often shifts throughout the call. We’re like preaching to the choir just talking to ourselves here. But like that’s why every we always tell people come get evaluation early early early because you just never know. You never know what you’ll learn that could make your value increase. Are there any key actions you recommend to we’ll say e-commerce sellers specifically but it could apply to anyone with an online business that they can take right now to increase their value in the long term. So one thing I always recommend especially for e-com sellers is bookkeeping. keep track of your financials as soon as possible. Um, keeping a monthly profit and loss statement allows you to have more visibility into your business, into your cost structure, and this, it may not seem kind of obvious that this actually increases value, but it does in that it allows you to identify trends very early on. um you know if you’re if you notice that your advertising uh cost as a percentage of total revenue is increasing well that’s one area of your business you need to look at 

07:45 Timeline Shifts After Valuation

and similar with COGS if your cost of goods sold is increasing something to look at um it also helps you kind of identify opportunities to kind of um you know reduce overhead if you have overhead that really isn’t contributing value um it allows you to to notice like okay all my revenue is coming from this one or these two sources. Let’s diversify traffic. Um, so that is definitely one thing that just as a business owner having that visibility into your business is so crucial. Another thing is thinking ahead in terms of kind of what are the next growth initiatives you really want to pursue. Um, always kind of having that growth mindset of kind of what can you do to I mean it’s pretty obvious really because trends is one of the most key things that influences your business’s value um as well as your earnings overall. Uh so just kind of having that growth mindset and um keeping things moving in the right direction. Once sellers are sort of farther into the process, maybe they are speaking with buyers or they’re in due diligence even. What’s some of the advice that you give them? Like I’m sure a lot of people don’t really know what that experience is like until you’re in it. And then once you’re in it, it’s it can be high stress. It can be very emotional. Um what’s some advice that you’re typically giving sellers in like the the latter half of selling their business? So once you’re in due diligence, this is a really crucial stage. Um this is kind of where a buyer has an opportunity to learn everything there is to know about your business and verify everything that’s been represented. 

09:13 Bookkeeping Boosts Business Value

And it’s also kind of an opportunity to continue to build trust so that the buyer feels comfortable crossing the finish line, closing the deal, and you know, that’s when you have your successful exit. So, what I would say is be thorough and complete in responding to any questions or queries for information. Um, try to be as responsive as possible. You know, giving quick responses. even if you can’t deal with something that day, just say, “Hey, thanks for saying it’s over. I’ll get back to you tomorrow or whenever it is.” And really just kind of being there and being as cooperative as you can to provide the buyer with the information they need. Um, and doing so in a complete and comprehensive way that really instills confidence that you’re not hiding anything and that they have the information they need to again feel confident completing the deal and crossing the finish line. And Quiet Light provides a pretty um handholding experience for lack of a better phrase. So like during that due diligence process, can you talk a little bit about like if you were working with Quiet Light, what does that like what’s the advisor’s role in that process? What does that look like? Um how involved are are we? I would say it kind of starts long before you actually are in due diligence. 

10:32 Growth Mindset and Trends

So one of the early stages of kind of preparing to sell your business is filling out this very in-depth client interview document. it it can really vary depending on the complexity and size of your business, but let’s say 70 to 150 questions. Um, could be more, could potentially be less, but generally that range. And this is really where we’re diving into all the nitty-gritty about your business and trying to understand it from a buyer’s perspective or or kind of how a buyer will view it. So, the reason I bring this up here is because this kind of helps us identify all the areas that we’re going to need to address with buyers during due diligence. And of course, buyers may bring up new questions that we haven’t asked. That that does happen for sure, but at least getting as comprehensive of understanding of what we’re dealing with um when we kind of go through the process. Once we’re in due diligence, a lot of it does take place directly between you as the seller and the buyer. I mean, you’re the one providing information to the to the the buyer. However, we are there throughout the entire process to let you know is a request legitimate. Is are is the buyer overreaching in their request for information because that can happen. We also do weekly generally we do weekly due diligence calls where we get on a call with a buyer and a seller and and you know my someone like myself as your adviser and kind of walk through everything and basically kind of help guide that process. 

12:00 What Happens During Due Diligence

Make sure that what is being asked of you is appropriate. Making sure that you can um you like helping establish clarity in kind of what’s being requested of you. And it’s also a little bit difficult to kind of uh put a finger on all of the kind of ways in which an advisor supports that process. But there are inevitably a lot of questions that come up and a lot of these questions are pretty important questions. So being able to turn to an advisor who’s been through the process, who does this every day, in my opinion is pretty helpful in having that go as smoothly as possible. Would you say there’s any, you know, common or just um red flags during that process that can pop up that sellers can sort of think about now to avoid during due diligence or like what are the big questions that buyers ask in that process? Yeah. So, red flags the so one big one is when there’s some sort of incongruity between what’s been represented on the front end in the P&L listing materials and what is discovered later on. It’s not completely, you know, out of like out of the question that sometimes there’s small mistakes or things that weren’t known about a business that come to light during due diligence even when all parties are being completely forthright and honest. 

13:20 How Advisors Help Post-Offer

Like that that does happen. But being as thorough as possible in you know preparing your profit and loss statements and financials in um providing accurate information will really help minimize the number of things that come to light that we just didn’t know about in our material to you know what the deal really entails. So that’s definitely one thing. Another are trend. So, one thing I always advise sellers is when you’re preparing to sell your business, continue to to run your business as if you’re not going to sell. So, you don’t want to take your foot off the gas and think, “Okay, well, you know, I don’t I’m not going to be getting two months from now’s profit, so I’m going to lax a bit because buyers will notice and it will not help the deal past the finish line.” So, you want to keep running the business as if you’re not going to sell. If trends start going down during due diligence, there’s going to be a conversation about it. It could lead to renegotiation. So, those are things you want to avoid. Keeping things, you know, keeping business going as usual, continuing to run your business as if you’re going to hold it forever is definitely going to maximize the likelihood of things going smoothly and reaching the the finish line. Ian, do you have any examples of a time where having an adviser with you by your side? Um, in this case, you helped that seller cross the finish line with selling their business. Recently, I had a deal where it was an e-commerce business. The owner was fulfilling all of the orders uh themselves and it was a really interesting business. I think it has a lot of potential and so does the buyer. 

15:05 Red Flags That Can Sink a Deal

Um, however, as we kind of progressed through the process, it became very clear that it was not a very organized business and there were a lot of different SKUs, a lot of different products to keep track of. And um, earlier we talked about how one of the important qualities is transferability, one of the four pillars of value. And this business had some serious barriers to transferability. the owner knew how to, you know, keep track of all these products herself, but the buyer didn’t really see how that was going to transfer to him as as kind of the new owner. So, this deal came really close to falling apart. And what kind of saved it is we came up with a creative solution whereby the seller would transfer um only the fast moving uh SKUs, only the products that were selling consistently to the buyer at close. And then he would start fulfilling those and that would allow him to kind of understand the process of fulfilling orders. and she would continue to fulfill orders for the couple hundred other SKUs that were moving very slowly um each of them but between all of them they represented maybe 20% of sales. So they were meaningful in that they were contributing 20% of um top-line revenue but it just was very confusing to uh transfer all of that at once to the buyer. 

16:35 Case Study – Transferability Challenge

So we basically created a um framework whereby he would start just kind of focusing on the main SKUs. She would keep the um the remaining and over a period of 90 days that would transfer to the buyer um so that he would at the end of that period be running the business entirely on his own but not drinking from the fire hose you know on day one out the gates. That was a solution we came up with to a problem of transferability that again almost derailed the deal. The buyer called me. He was was about to walk away and we basically started brainstorming and came up with this idea of of making things more easy on the transition side for him and actually probably made it easier for her as well. Uh but allowed the deal to stay together and cross the finish line. Of course, the seller would probably prefer to be entirely out of the business, you know, at close as opposed to stay on for another 90 days, very part-time. But at least we were able to sell the business and um you know, she’ll be moving on to the next chapter and uh happy with the outcome. Yeah, that’s great. Great. I mean, what I like about that and um maybe you can speak a little bit about this is a lot of people ask, you know, why do I need to work with a professional? Why do I have to work with a quiet light adviser or any it doesn’t have to be us? Um and obviously the answer is you you can do it by yourself. Um but I think there are definitely strategic and um probably even just efficiency if nothing else um reasons to work with a professional. 

18:15 Why Working With a Pro Matters

So from your perspective when someone says like well why should I work with you? Why should I just do this on my own? What would you say to them? Well, yeah. There’s there’s a lot of reasons in my opinion. So, one is we’re doing this every day. This is what we do. And so, we understand kind of what buyers are looking for, what um areas of the business they’re focusing on, what questions they’re going to ask. Um, also at Quiet Light, all of us have been through this process as an entrepreneur. So, we have that firsthand experience as well. But basically, when you come to us, we’re looking at your business like a buyer and we’re then going to present your business. um highlighting all of the points that we know are going to be relevant for buyers. So, right there out the gate, you’re getting a representation that is queued into what buyers are paying attention to, what they value, what their concerns are going to be so that buyers have a very comprehensive understanding of your business in a way that allows them to make an informed decision because buyers really need to understand your business in order to be able to decide whether it’s the right investment opportunity for them. Additionally, if you’ve been through this, you know, there’s so many different stages and moving parts from um how to price your business well, how to negotiate with buyers when you get offers, how to field inquiries, even, you know, how to kind of have those initial conversations and answering questions. Uh which questions you answer, you know, right up front, which ones should wait till due diligence. So, your advisor really kind of serves as the uh kind of the gateway to your business and making sure that buyers are going through the right channels, having conversations in the right way. Once you’re in due diligence, there are a lot of questions that come up. There’s a lot of back and forth. There can sometimes be difficult conversations, decisions to make throughout this whole process, and it can be a really emotionally investing and draining process. 

20:10 Ian’s Journey and Amazon Sale

And having an advisor who again has been through this a lot of times to be able to call, to be able to turn to for answers and for support throughout this process in my opinion is pretty invaluable because this is your life’s work. This is maybe your most valuable asset. And having guidance throughout that process just is so so important in my opinion. Um, not to mention at Quiet Light, we provide access to a very wide pool of very qualified buyers who um have a high regard for Quiet and kind of our professionalism within the space. So, you’re getting access to that pool of buyers. So, just from the exposure you get, from the um representation and facilitation, there are just a lot of reasons why having an adviser can help you achieve a more successful exit. Yeah. and you’re one of our newest advisors um which is awesome but you’ve been with Quiet Light for a very long time but would love why don’t you tell um viewers like what is your entrepreneurial story or at least you know an one of the times you you sold a business uh and how you came to Quiet Light. So my uh entrepreneurial journey I would say started in college when I was 19. I did a um internship um learning how to run a house painting business. I excelled with it. It allowed me to kind of to to contribute greatly to um putting myself through college and um traveling afterwards. uh I won’t go through all of the chapters of my professional life, but then I later uh started an Amazon business and uh grew that while traveling for a while, ended up selling it, got connected with Quiet Light, um was on the content side for a while and then moved into the advisor world 

22:00 Final Thoughts and Contact Ian!

And basically I just now get to talk to other entrepreneurs and help them with what to me is one of the most exciting chapters of of an entrepreneurial’s life. entrepreneurs life of just selling a business. So, I’m super grateful to have this role and be able to help people and yeah, it’s it’s great. Amazing. Well, thanks for the time today, Ian. Um, if you guys want to work with Ian, you can reach out to him at Ianquietlight.com. Um, or in general, come to quietite.com. Inquiries quiet. We’re available in all sorts of ways and would love to talk to you about your business. Thanks so much. Thanks, Sam. [Music]