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Selling my Ecommerce Business

James Fake

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I'm anxiously holding back my official Congrats until the money is in your account, but so close! I have thoroughly enjoying watching your journey with this business from the very beginning to now... !
 
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amp0193

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I'm anxiously holding back my official Congrats until the money is in your account, but so close! I have thoroughly enjoying watching your journey with this business from the very beginning to now... !

Haha, yeah, you never know. Anything could happen. It's not a done deal until I have the money.

Pouring over the document today, it was just nitpicky stuff... nothing major was changed from the broker's original document. So, other than the buyer's getting cold feet, and just refusing to sign the final document... we're in the clear.

I'll let you guys know when the deal is done!
 

amp0193

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This will likely be the go-to reference thread for people looking to sell their business for years man. Great job with all this.

When everything is done and the dust has settled, I'll do a big write-up with lessons learned, and the takeaways that anyone thinking of selling their business down the road should be able to apply, and start working on. There's a lot of things I could have done to make this process easier.

Between that write-up and @JasonR 's recent thread on lessons learned from selling his business, I think there will be a good road map for those looking to sell a business.
 

Greg R

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Haha, yeah, you never know. Anything could happen. It's not a done deal until I have the money.

Pouring over the document today, it was just nitpicky stuff... nothing major was changed from the broker's original document. So, other than the buyer's getting cold feet, and just refusing to sign the final document... we're in the clear.

I'll let you guys know when the deal is done!

That is good to hear!

I was recently in a deal that went south at this phase (I've heard many deals fall through at the 11th hour).

We spent six months hashing out the details. When it came down to putting everything in the contract, the deal completely fell apart after the lawyers got a hold of it. It was a bloodbath going back and forth. Many dollars were spent communicating through the lawyers. Obviously they were both trying to do their job by putting their clients interest first, but it ruined the deal. Never again will I conduct business that way.

One learning lesson for me is to be up front as much as possible and do all important communication yourself. Don't hide behind your lawyer.
 
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Aaron T

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Very excited for you. Holding back on the full congratulations, but a definite grats on getting it this far!

I can't wait to see the full writeup. There is a lot for us to learn from here.
 

ZCP

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Q: if you started that business today with the intent to sell it like you did, what systems / processes would you have used or done differently?

I have had some tell me, 'start with netsuite. No quickbooks'.
Others have said leverage sooner and hire quicker.
Others say 'spend ALL you time selling the first year'.

What says @amp0193 ?
 

PTP

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Q: if you started that business today with the intent to sell it like you did, what systems / processes would you have used or done differently?

I have had some tell me, 'start with netsuite. No quickbooks'.
Others have said leverage sooner and hire quicker.
Others say 'spend ALL you time selling the first year'.

What says @amp0193 ?

To tack onto what @ZCP said, are there any systems for customer service you had in place? I know AZ took care of a lot of it, but what about on your own website?
 
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JAJT

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Q: if you started that business today with the intent to sell it like you did, what systems / processes would you have used or done differently?

Not Amp, but, if it were me:

1. Treat accounting as a major, not a minor, part of the business. Track everything, and do it properly and regularly. Track inventory using COGS - this makes a HUGE difference in how good your numbers look. Huge, huge difference on the spreadsheet since you only track the cost of the goods you sold (duh) instead of huge bulk inventory orders. It's also a total pain in the a$$ if you don't do it from day 1. Tracking expenses like "$5k for inventory" is easy, figuring out starting inventory, ending inventory, units sold, cost of those units, etc... is a pain in the a$$. But an important pain in the a$$.

2. Don't waste money on crap you don't use/need. This one is less important but I know I'm guilty of signing up for everything/anything I think will help me out and forgetting to cancel them and it makes everything look confusing and wasteful. $30 a month here, $50 per month there could all be used to make your numbers look better, rather than worse.
 

CareCPA

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Not Amp, but, if it were me:

1. Treat accounting as a major, not a minor, part of the business. Track everything, and do it properly and regularly. Track inventory using COGS - this makes a HUGE difference in how good your numbers look. Huge, huge difference on the spreadsheet since you only track the cost of the goods you sold (duh) instead of huge bulk inventory orders. It's also a total pain in the a$$ if you don't do it from day 1. Tracking expenses like "$5k for inventory" is easy, figuring out starting inventory, ending inventory, units sold, cost of those units, etc... is a pain in the a$$. But an important pain in the a$$.
I'm very biased, but yes.
It's much easier, and more accurate, to do it in real-time vs after the fact.
 

amp0193

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That is good to hear!

I was recently in a deal that went south at this phase (I've heard many deals fall through at the 11th hour).

We spent six months hashing out the details. When it came down to putting everything in the contract, the deal completely fell apart after the lawyers got a hold of it. It was a bloodbath going back and forth. Many dollars were spent communicating through the lawyers. Obviously they were both trying to do their job by putting their clients interest first, but it ruined the deal. Never again will I conduct business that way.

One learning lesson for me is to be up front as much as possible and do all important communication yourself. Don't hide behind your lawyer.

I think we'll be ok. My lawyer was pretty cool with everything, just adding some specificity here or there. After reading your post though, I'm going to send the buyers a short friendly email explaining one of the changes to the non-compete that could be taken the wrong way possibly.

I didn't functionally change anything to what they sent me, just added some "as related to the business" here and there, and specified how the price of the inventory on hand was going to be calculated.

I didn't like the non-compete as it was, as it said "all same or similar businesses". Well, my other businesses will also be importing products to sell through Amazon/ecommerce, and could possibly be construed as similar, so I just wanted to get more specific on the type of products I could not compete in.
 
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amp0193

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Q: if you started that business today with the intent to sell it like you did, what systems / processes would you have used or done differently?

I have had some tell me, 'start with netsuite. No quickbooks'.
Others have said leverage sooner and hire quicker.
Others say 'spend ALL you time selling the first year'.

What says @amp0193 ?


Don't sell a product that others might be hesitant to sell. It will limit your pool of buyers, and you'll end up with a lower sale price.

Spend more time thinking about strategy and ways to grow the business. Hire out when you no longer have time to do this.
 

amp0193

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To tack onto what @ZCP said, are there any systems for customer service you had in place? I know AZ took care of a lot of it, but what about on your own website?

My system was that my sister did all of my customer service for me.

You don't need much of a system... just need someone to respond to some emails with templates you have provided, and the ability to google answers to customer questions.

It would have been better for the sale if I had had a VA that would transfer with the sale. It wasn't a deal breaker in this case, but in the future, I won't rely on family members as contractors.

When you get to a certain volume, then I guess you need a ticket system, but I was never to that point. There were only 15 or so customer service emails a day across all channels.
 

amp0193

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1. Treat accounting as a major, not a minor, part of the business. Track everything, and do it properly and regularly. Track inventory using COGS - this makes a HUGE difference in how good your numbers look. Huge, huge difference on the spreadsheet since you only track the cost of the goods you sold (duh) instead of huge bulk inventory orders. It's also a total pain in the a$$ if you don't do it from day 1. Tracking expenses like "$5k for inventory" is easy, figuring out starting inventory, ending inventory, units sold, cost of those units, etc... is a pain in the a$$. But an important pain in the a$$.


Absolutely. I ran the business for 2 years with no books. Bad idea, and it took me 9 months longer to sell the business than I wanted it to as a result.

Not to mention some poor decisions I made this year off of a lack of data that probably cost me $50,000+ this year in profits, and $100,000 off the sale price, as a result.
 
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amp0193

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The buyers accepted the small changes to the Asset Purchase Agreement that I proposed, with some small edits.

I approved their edits, and now I have the final Asset Purchase Agreement in hand, signed by all parties!

Meaning, they have formally agreed to purchase the business.

It's all downhill from here.


Next up: The buyers will wire the purchase price of the business + cost of inventory (which I painstakingly calculated out Thursday afternoon) into an escrow account.

Once the money is in escrow... I start the massive wave of account and file transfers.

Upon successfully delivering all of the assets, escrow will send me the money.


Fingers crossed for a smooth transfer.



A reflection on what I've been going through:
This was a tough week for me. The closer we got to the end, the more anxious I felt. The feeling of just wanting it to be over. The fear of having to go through this entire process again if the deal went south. It's been a struggle to get anything done. The waiting really wears you down. Wondering what the buyers are thinking . Why didn't they respond to that email? Are they getting cold feet? Knowing there's nothing you can really do to help the process, except wait. I'm not even excited anymore, I just want it to be done.

My broker told me I would feel this way. I didn't believe him.

Selling a business is an emotional roller coaster.
 
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Aaron T

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The buyers accepted the small changes to the Asset Purchase Agreement that I proposed, with some small edits.

I approved their edits, and now I have the final Asset Purchase Agreement in hand, signed by all parties!

Meaning, they have formally agreed to purchase the business.

It's all downhill from here.


Next up: The buyers will wire the purchase price of the business + cost of inventory (which I painstakingly calculated out Thursday afternoon) into an escrow account.

Once the money is in escrow... I start the massive wave of account and file transfers.

Upon successfully delivering all of the assets, escrow will send me the money.


Fingers crossed for a smooth transfer.



A reflection on what I've been going through:
This was a tough week for me. The closer we got to the end, the more anxious I felt. The feeling of just wanting it to be over. The fear of having to go through this entire process again if the deal went south. It's been a struggle to get anything done. The waiting really wears you down. Knowing there's nothing you can really do to help the process, except wait.

My broker told me I would feel this way. I didn't believe him.

Selling a business is an emotional roller coaster.

This is so amazingly awesome!! I am gonna have to celebrate with you as I am excited just watching the end part of your successful journey.

Truly Congratulations!
 

Nigel B

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I approved their edits, and now I have the final Asset Purchase Agreement in hand, signed by all parties!
New around here, but very motivating to see someone closing their deal and taking a step closer to their goals. Congratulations.
Out of interest, were you a MFL follower before starting the business, or after?

And thank you for sharing so much of the process - really helpful (for later).
 
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Longinus

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Selling a business is an emotional roller coaster.

You probably got this question a lot, but I still wonder: why selling?

Are you tired of the products you sell? I suppose it brings you a nice income monthly. Why slay the goose with the golden eggs?
 

Philip Marlowe

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You probably got this question a lot, but I still wonder: why selling?

Are you tired of the products you sell? I suppose it brings you a nice income monthly. Why slay the goose with the golden eggs?

Here's his reply from earlier. Probably more to it:

"It's not a need to sell. It's an I'd like to sell, but wouldn't be the end of the world if it didn't. Next business is pretty capital intensive, and it would just be able to get going a little faster with some extra cash. It's happening either way though. I also am pretty bored with the current business and don't really feel like working on it anymore, and want to turn my full attention to the next project."
 

amp0193

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New around here, but very motivating to see someone closing their deal and taking a step closer to their goals. Congratulations.
Out of interest, were you a MFL follower before starting the business, or after?

And thank you for sharing so much of the process - really helpful (for later).

Everything I have is because I read the Millionaire Fast Lane, which brought me here as a result.

The old importing threads by @Vigilante and @biophase are got what me thinking about ecommerce.

I was stuck in a dead-end teaching job before that.
 
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amp0193

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You probably got this question a lot, but I still wonder: why selling?

Are you tired of the products you sell? I suppose it brings you a nice income monthly. Why slay the goose with the golden eggs?

  • Tired of the products I was selling (I think they're dumb and feel morally weird about selling them)
  • Tired of the customers, who are kind of crazy by definition, since they are buying these products.
  • I didn't like the potential liability associated with the products.
  • I wanted to get out while the niche was on a healthy uptrend.
  • The business had sort of hit a plateau in terms of product development, and the path to growth was kind of hazy.

Also, I found a bigger goose, and it's already laying much bigger eggs for me. I don't have time to feed two geese.
 

amp0193

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"It's not a need to sell. It's an I'd like to sell

This was very helpful throughout the whole process.

I can't imagine how much more stressful selling a business would be if you needed to cash out for some serious reason.

Buyers would definitely pick up on your desperation as well.
 

Nigel B

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I wanted to get out while the niche was on a healthy uptrend.

A really solid reason to get out while the qoing was good!

I found a bigger goose, and it's already laying much bigger eggs for me. I don't have time to feed two geese.

And that make even more sense - focus the energy on the goose which produces more.

Really good to see this is a start-to-finish outcome of MJ's inspiration and your hard work!
 
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jpanarra

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Wow just read through the whole thread, what an emotional roller-coaster, I'm happy for you and looking forward to giving you your legit congrats once that contract is officially signed!
 

amp0193

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Wow just read through the whole thread, what an emotional roller-coaster, I'm happy for you and looking forward to giving you your legit congrats once that contract is officially signed!

It's already officially signed :)

Just waiting for that wire to hit escrow any minute now. Assets are ready to transfer.
 

jpanarra

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It's already officially signed :)

Just waiting for that wire to hit escrow any minute now. Assets are ready to transfer.
Then a well deserved congrats is in order!!! Congrats man!

Sent from my SM-N920V using Tapatalk
 
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KLaw

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Let's go back in time when the contract was basically done but not signed. A different buyer approaches you with the same contract and will sign on the spot. His offer is double the original. What do you do?
 

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It's already officially signed :)

Just waiting for that wire to hit escrow any minute now. Assets are ready to transfer.

Can I ask how you structured the sale? How did you divide assets, intellectual property, goodwill and intangibles? Did you sell your LLC or just the assets within it?
 
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amp0193

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Let's go back in time when the contract was basically done but not signed. A different buyer approaches you with the same contract and will sign on the spot. His offer is double the original. What do you do?

Where was this guy 3 months ago? :rofl:


I don't know man, I hate hypotheticals, especially unrealistic ones.


I got a price in the range of what the business was worth. Can't complain.
 
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amp0193

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Can I ask how you structured the sale? How did you divide assets, intellectual property, goodwill and intangibles? Did you sell your LLC or just the assets within it?

It was just an asset sale.

65% - assets
35% - goodwill

intellectual property and intangibles were divided up in there under the 65% assets.
 
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