3 Questions to Ask When Selling Your Ecommerce Business
When getting ready to sell your ecommerce business, conversations with brokers and buyers can be a goldmine of information. PLUS: 4 Things Thrasio looks for in a brand
February 10, 2022 Gwen Sylvester
When I talk to entrepreneurs they often ask me when to sell their online business.
It’s a great question. You put a lot of time, energy, resources, and work into building your brand and product line. And when you’re finally ready to exit, you want to know you’re selling at the right time to maximize your price.
Here’s what I often tell them: You want to sell your ecommerce business on an upward trend. So, no matter what the market is doing, your best strategy is to first get your brand growing up and to the right. Take a look at your top and bottom-line trends over the past 12 months. What story do they tell about your business? Is your company growing or shrinking? Is it a roller coaster? Any buyer, including Thrasio, will want to see positive growth, smart decision-making, and solid operational foundations with insights on how to keep the growth going. We wrote the book Getting Your Ecommerce Business Ready for Sale to help you achieve these goals. The book is full of actionable advice on how to get your business ready to go when you’re ready to exit.
Three questions to ask buyers and brokers that help bring more value to your brand
When your story is in the right place, start having conversations with brokers, buyers, and your trusted advisors. You want to explore the market sooner rather than later – even if you aren’t thinking about selling in the near-term.
Here’s why: those conversations can give you a wealth of knowledge about what buyers want to see in a business. That in turn will help you identify areas of opportunity and growth for your company. Most DTC or FBA business buyers are happy to talk – after all, it’s in their interest to build relationships with entrepreneurs like you.
Here are 3 questions to get the conversation started before you sell your online business:
1. What can I do to make my business more attractive to you?
Talk to multiple buyers and brokers, and you’ll probably start to hear them ask the same probing questions about certain areas of your business. Pay attention: these are often your biggest strengths and weaknesses. Try not to get defensive about how you do things today. Think of the conversation as a consultation. The information you’re hearing is valuable and could help you develop a list of action items for improving your business over en route to an exit.
2. Who would be operating my brand? Can I meet with them?
You want your brand to be in good hands, so ask to speak with the members of the buyer’s team who will be working on your brand. A buyer should be willing to grant you that opportunity to learn more about their experience and expertise.
Don’t be shy about asking buyers how they’d deal with complexities in your business.
3. How would your team handle this complicated area of my business?
Selling your business is as much about auditioning buyers as it is about impressing them. Don’t be shy about asking buyers how they’d deal with the most complex parts of your business. A good buyer has seen and heard almost everything and should be able to address your questions with confidence. And build your confidence in their abilities.
4 things Thrasio looks for in an ecommerce business
Getting your business ready for sale is about more than the bottom line. It also means being smart about your overall business strategy. Of course, no buyer will expect you to excel at every aspect of running a business, but when you build a business with solid foundations, a buyer will be able to start growing your business out of the gate. Here are just a few things Thrasio loves to see in a business we’d consider buying.
- Top-line and bottom-line growth over the last 12 months of operations. Ideally, we’d love to see growth over the entire lifetime of your business, but the most recent history is going to give us a very accurate view of how the business is trending.
- Business decisions that resulted in larger contribution margins, such as reducing manufacturing costs or developing a smarter strategy for your marketing spend.
- A business that’s focused on 1 or 2 key areas of growth that you are executing on. We don’t need you to be doing everything, but we want to see that you’re running your core business really well.
- Owners who know their business well, have a clear handle on the challenges and potential opportunities, and have a vision for how the brand can grow in the future if you didn’t sell.
50 pages of free advice for ecommerce sellers
Written by Thrasio’s in-house experts, Getting Your Ecommerce Business Ready for Sale contains actionable advice on brand management, creating a stronger profit and loss statement, shoring up your supply chain, and more. Whether you want to sell in six months, 2 years, or not at all, it will help you build a high-value brand with staying power.
About the Author
Gwen Sylvester is the senior director of acquisitions at Thrasio. Gwen started her career in finance in a private investment office and then pivoted to corporate development, where she spent 8 years in the early childhood education space. Gwen lives in Portland, Oregon, and enjoys spending time in the great outdoors.