When Is the Best Time to Sell My Online Business?

If you are a business owner seeking to exit, you may have wondered, “When is the best time to sell my online business?” Indeed, there are many factors to think about when it comes to timing the sale of your business. Typically, selling at the right time leads to more favorable terms and a higher purchase price.

In this article, we discuss:

• What to consider before selling your online business
• When is the right time to sell an online business
• Factors that impact the best time to sell an online business
• What makes your online business attractive to buyers

What to Consider Before Selling Your Online Business

As a business owner, there are many things that go into determining when is the right time to sell your online business. Many of these have to do with specific business performance characteristics or market trends. Others are more personal in nature. Let’s take a look at some of the things that are important to consider before selling your business.

Skill Set

Firstly, it is prudent to consider whether your specific skill set matches the needs of the business in the current and future stages of development. It is important to be honest with yourself throughout this process. 

The skill sets that are required to start, grow, and run a business often vary depending on what stage the business is in. The skills that were required early on may be less important as the business matures. If this is the case, it may be smart to sell the business to a qualified buyer who is better able to maximize its potential. 

For example, you may excel when it comes to generating ideas, product development, identifying prospective customers, and establishing a product-market fit. These are all crucial skills during the initial phases of a business. 

As time goes on and the business grows, however, you may find yourself spending much more time building out systems or managing teams. If these activities are not your strong suit, it might be time to sell the business to someone who does excel at these aspects. 

“The skill sets that are required to start, grow, and run a business often vary depending on what stage the business is in.”

Outside opportunities

The right time to exit depends on more than just the performance of your current business. The opportunities available to you outside of your business will also influence whether or not it is the right time to sell. 

For example, let’s say a colleague of yours offers you the chance to join a team launching a promising new venture. In such a situation, you may need to free up time and energy in order to say yes to the opportunity. Doing so may require you to sell your current business. 

On the other hand, if you don’t currently have other projects in the pipeline, it may make more sense to hold onto your business until you have something else lined up.

Personal financial situation

Your personal financial situation will also have an impact on the timing of your exit. For example, if you need to free up cash in order to make a down payment on a family home, selling your business may become more necessary. 

Additionally, you may want the extra cash to start a different business venture, especially if SBA loans are not an option for you. 

Of course, it is important to keep in mind that if you sell your business you will no longer have the cash flow from that business.

“Personal and professional interests can change over time. By taking this into account when deciding on the right time to sell, you can help yourself avoid burnout and continue to enjoy your work.”

Interest

Lastly, it is important to think about where your interests lie. If you no longer have the same passion or zest for working on the business, you may be better off finding something that does get you excited. Personal and professional interests can change over time. By taking this into account when deciding on the right time to sell, you can help yourself avoid burnout and continue to enjoy your work.

When Is the Right Time to Sell an Online Business?

As we’ve seen, every business and situation is unique. There are common characteristics that improve the favorability of selling at a given time. These apply whether you are running an Amazon FBA business or a content website. Some of these include: 

• Creating positive business growth trends
• Maintaining efficient systems
• Keeping orderly financials
• Reducing barriers to transferability

“Selling your business while it is exhibiting strong growth can help ensure you receive top dollar for all of the effort you put into building it.”

Creating positive business growth trends

The current growth trend of your business is one of the most important factors when it comes to determining the right time to sell. Ideally, it is much more favorable to sell when the business is in the middle of a period of strong growth.

Any smart prospective buyer is seeking to realize a healthy return on their investment. The most secure way of doing this is to buy a business that is expected to continue growing into the future. 

Selling your business while it is exhibiting strong growth can help ensure you receive top dollar for all of the effort you put into building it.

Maintaining efficient systems

The new owner will also want to see that running your business after purchase will be as effortless and easy as possible. For this reason, it is important to have clear and efficient operational systems in place before putting your business on the market. Doing so will help maximize the price your business ultimately sells for.

If your business does not currently have systems in place, now may not be the time to sell. Do the work necessary to create your systems prior to heading for the exit. 

Keeping orderly financials

Similarly, it is important to have your financial documentation in order prior to selling. Failing to do so will make your business less attractive to potential buyers, ultimately driving down the purchase price. If you don’t already have proper financial documentation in place, take time to do so before you try to sell your business.

Reducing barriers to transferability

Depending on what you are selling online, it is important to consider how easy it would be to successfully transfer your business to a new owner. If there are barriers to transferring ownership successfully, work to remove these barriers first. 

For example, an Amazon FBA business may not require any work in order to be transferred easily. But if you run a content site that relies on your unique personality, it would make sense to remove your image and voice from the site’s content plan for a period of time prior to selling. By doing so, you demonstrate that the site can be run successfully without your likeness. 

Working with a qualified Business Advisor can help you prepare for a well-timed exit.

Factors That Impact the Best Time to Sell an Online Business

Aside from internal performance metrics, there are several external factors to consider when deciding on the right time to sell. The overall state of the market will have an impact on the final sales price and deal terms. 

External factors to consider include:

• Market growth trends
• Seasonality

“By selling your business during a period of strong market growth, you help maximize your sale price and win more favorable terms.”

Market growth trends

Regardless of whether or not you are selling a big or small business, it is important to take into consideration whether or not your market as a whole is currently experiencing growth, staying steady, or in decline. 

As we have already seen, the company’s growth trends will have an impact on the expected future earnings of the business. The market’s growth trends also have an influence on the expected future earnings. 

If the market is experiencing strong growth, this bodes well for the future performance of the company. This, in turn, raises the current value of the business at the time of selling. 

By selling your business during a period of strong market growth, you help maximize your sale price and win more favorable terms.

Seasonality

Additionally, it is important to factor in seasonal differences when deciding on the right time to sell your business. Many businesses, though not all, perform better during certain times of the year. 

For example, if you sell pool toys on Amazon, you will likely receive most of your orders during the spring and summer months. In many other cases, the holiday season is by far the busiest time of the year. These busy periods are also likely to be when your profit margin is the highest. 

In order to maximize your exit, it is smart to sell your business as you approach your busiest period of the year. The strong performance of your business as it goes through your high season will make it more attractive to potential buyers.

What Makes Your Online Business Attractive to Buyers

Regardless of whether you are running a SaaS business or an e-commerce business, there are several factors that will help determine how attractive your business is to potential buyers. These factors also play a role when it comes to business valuation. Together, these are known as the Four Pillars of Value. 

These include:

• Growth
• Risk
• Transferability
• Documentation

Growth

As we have discussed, the past and current growth trends of your business have a large impact on its perceived value. Additionally, the potential for future growth is equally as important. Stronger growth will attract a higher sale price. 

Whether you work to boost engagement for your content site, achieve more sales for your online store, or expand your SaaS customer base, driving growth will help make your business a more attractive prospect for potential buyers. 

Risk

All other things being equal, the riskier a company is perceived to be, the less attractive it is. You can help increase the value of your business by eliminating or minimizing risk throughout your business operations.

“All other things being equal, the riskier a company is perceived to be, the less attractive it is.”

Transferability

A potential buyer will want to know that they can easily and successfully take over ownership without the performance of the business suffering. As discussed previously, having operational systems in place prior to selling your business will help to increase the ease with which a new owner takes over operations. 

Documentation

Proper documentation makes it easier for a potential buyer to verify your financials and examine the performance of your business operations. In addition, it helps to instill confidence that you have run your business in a responsible and mature manner. 

There are many factors that go into determining the right time for you to sell your business. By doing your homework and timing your exit well, you can help drive up the value of your business, find the right buyer, and receive terms that are more favorable to you.