Increasingly the economy is being driven by online businesses. People realize they can leave the confines of their typical day job and instead enjoy freedom and flexibility by starting a blog or an e-commerce business. Part of the appeal of building an online business for many people, along with the flexibility and sense of being their own boss it offers, is the opportunity to possibly sell that business in the future.
There are online marketplaces where you can put your online business up for sale once you’ve built it to something that would create value for a buyer. The question really becomes, how do you grow your business to that point, particularly in a competitive environment? According to a Firmex report entitled “Mid-Market M&A: The Valuation Gap,” now is a difficult time to sell a business, with January 2016 representing the worst in 25 years for mid-market deals. So how does an online business, which faces even steeper competition than most larger mid-market organizations, build a brand that’s going to sell for the right price tag?
Know Your Audience
If you want to be competitive in your quest to sell your online business, the first thing buyers are going to want to see is that you resonate with your audience. They’re going to want to see that you’ve built a loyal and significant audience and that you’ve developed a community of followers. That’s the first way you’re going to set yourself apart from other online businesses, so to do this it’s important you build your brand around your audience. Identify and work to understand your audience so you can delve into how to make a lasting connection with them. It’s your audience that’s going to determine the value of your business. For example, some of the first things a buyer will probably look at are stable or growing traffic, repeat sales or visitors, and long-term analytics and traffic statistics.
Don’t Build a Personal Brand
This is a big mistake bloggers and online business owners make and it can ruin their chances of selling. You may start your website as a passion project, not even realizing it could turn into a legitimate business that you want to sell eventually. In doing so, you may be building your personal brand, rather than your business brand. The problem then becomes that buyers aren’t going to be interested because they’re going to feel as if without you, your online business has little to no value.
Consider this: you start a brick-and-mortar small business in your town. You’re likely going to spend quite a bit of time on the basics of branding, such as logos, colors, and your overall image. This brand is really what sticks with people, even beyond your products and services. Do the same thing with your website. Much of this branding work will be focused on the design of your site, so take your time here and work to create something lasting. When you have an online business you have more opportunities to be bold and innovative with your branding, so keep that in mind.
Once you get these key branding components right, you can continue building your website until it’s ready to sell, and according to Shopify, that can be a profitable venture. Based on their compilation data, the average sale price of e-commerce businesses is somewhere around 2.35 times earnings. That can be a significant profit if you’re willing to put in the initial work to build your brand.