The Entrepreneur Forum | Financial Freedom | Starting a Business | Motivation | Money | Success

Welcome to the only entrepreneur forum dedicated to building life-changing wealth.

Build a Fastlane business. Earn real financial freedom. Join free.

Join over 80,000 entrepreneurs who have rejected the paradigm of mediocrity and said "NO!" to underpaid jobs, ascetic frugality, and suffocating savings rituals— learn how to build a Fastlane business that pays both freedom and lifestyle affluence.

Free registration at the forum removes this block.

My experience selling my ecommerce business

jsdev

Contributor
User Power
Value/Post Ratio
633%
Mar 28, 2017
9
57
Montreal
I’m coming out of the shadows to give some value back. I owe a lot of this forum.

I got my start in ecommerce a back in 2013 when I read @biophase first ecommerce thread.
I won’t go into details of getting started in ecom, as his threads cover the fundamentals, and he knows his shit.

So I want to share my experiences in selling an ecommerce business. This is not the blueprint to sell every business, so please do not gamble your business life and take my words as gospel, but mine went down smooth, so I wanted to share.

So knowing what I know now, BEFORE you sell your business..

1. Know why you want to sell. Buyers will ask you this. As a rule, it's better to be transparent, and not bullshit your buyers.
2. Have clean books from day one & have a great accountant. I wasted a lot of time and ultimately money working with a cheap bookkeeper who was a hack. When I was looking to sell it took a lot of time and money with a new accountant to clean up the mess. Get in the habit of tracking your financials on a monthly/quarterly basis and don't skimp on this expense.
3. Have strong relationships with your suppliers: Over the years I worked with my suppliers, I always put a lot of effort into the relationships. Get to know everyone who works there on a personal level. This paid dividends during the sale. When it came down to transitioning from me to the new owners of the business, it went flawlessly.
4. Have an Idea of what you want for the business before you sell- Could be 1x-10x profit. There’s no right or wrong answer here, it comes down to you and your lifestyle. Do your own research, and know what you want coming in. Talk to as many people as you can about this one, not just your broker.
5. Know the kind of buyer you want. For me it was very important to have someone who I like as a person, is tech savvy, and understood the risks In buying an ecommerce business. I’d take a and positive business relationship over an adversarial one as I'll be able to do business with them again in the future.
6. Find a good business lawyer. You will need them later in the process when it comes to contracts.

So knowing all this, here’s how my deal played out...

First, I Hired a business broker. I managed to find a good one, but not before interviewing some shady characters.

Some broker red flags:

  • Some will pressure to put a lower price so they can flog the business quicker.
  • Another broker talked extensively about selling to “dumb buyers,” and withholding the realities of running an ecommerce business to get the sale through quickly. FYI, ‘dumb buyers‘ are people who think they can buy an online business, sit back and watch the money roll in. I decided to stay away from these buyers as the transition would be very difficult.
  • Another red flag is a broker suggesting you don’t need a lawyer because they only slow things down and overcharge. True, they might be expensive, but its better to cover your a$$ and have a 3rd party to look over contracts.

So choose a reputable broker. Look for red flags. Trust your gut.

Next stage, I worked with the broker to develop a 'blind-summary’.
This is well presented booklet a buyer will see after signing an NDA, this can include:
  • Monthly income statements trailing 36 months
  • Screenshot of Google Analytics traffic (unique sessions) last 24 months
  • Screenshot of Google Analytics showing traffic sources (organic, PPC, etc)
  • A summary of the history of the business, challenges, big wins, growth opportunities.
After this, my broker promoted the business for sale. Potential buyers would sign the NDA and read the summary. Those interested would organize an introduction call for 30 minutes.
This stage took about 3-4 months to find the right buyers.

When a call took place, It usually got stated with questions like:
Business Background, why am I selling, how the day to day works and where the opportunities are to expand.

The important thing here is be straight up. I was very open about how you could expand the business, and what I would do over the next 3, 6 and 12 months.
In saying that, you do not need to give away every little specific detail of the business, and your broker should be schooling you on how to conduct yourself if they are worth a dime.

I got a mixed bag of potential buyers on those first calls. Some were a good fit. At the other end of the scale, there was the dreamers, borrowing 100%, who could hardly use a computer. I would politely talk them out of it.

It helps if you are screening during the initial call, as you are less likely to come across as desperate to sell.

Those who got past the call stage would come meet me and the broker at the business for a tour. Only 2 buyers got to this stage.

I had a good feeling about one of the buyers, so we went to have a meeting with the key supplier and a tour of their facility, who were excellent (because I had invested in the relationship) and took the time to answer any questions the buyers had... they did the selling for me.

After that, an offer came very quickly. First offer was exactly what I wanted and I accepted it.
The saying is ‘never accept the first offer’, and I’m sure I could negotiate more, but I felt I got what I wanted and was happy to be out.

So contracts were drawn up by lawyers, terms were negotiated and we both signed.

Next stage, I worked with the business for a week to get them set up. We negotiated that I’d be available on site for 10 working days (9-5), and over the phone for up to 3 months.

  • Just in your contract, Be specific in the times you are available, if you sell to an a**hole, they might insist you stay on site 24 hours a day for 10 days and can call you at midnight every night for 3 months. This is where having a lawyer is useful.

In the end, I was only there for 3 days, and have answered about 5 emails since. My buyers are pretty awesome. So overall, it could not have went any better.

What am I doing now?

The business really took over my life for a few years, so I’ve gone back to go university and finish off my degree, and plan to start a new venture after that. To keep sharp I continue to work as a developer & marketer for a few ecom clients.

Recommended Resources

Biophases ecom threads.
Built to Sell
How to win at sport and business.
Every Episode of The Profit.
Ezra Firestone’s stuff. He’s great for paid traffic.
Clarity.fm .. Best website on the internet.
Ecommerce Fuel podcast.

Looking back now, a big turing point in my life was reading this forum. So feel free to hit me up, always got time for anyone in the trenches.
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

JAJT

Legendary Contributor
FASTLANE INSIDER
EPIC CONTRIBUTOR
Read Fastlane!
Read Unscripted!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
549%
Aug 7, 2012
2,970
16,306
Ontario, Canada
1. Know why you want to sell.

This was huge when I sold my skin business. Every single buyer wanted a very logical reason that made sense. They will smell bullshit a mile away.

Another thing that I wasn't really expecting (but made total sense) was being able to talk about your numbers in extreme detail. I wrongly assumed providing the numbers would be enough but I got a TON of questions like "why did sales dip in this month 15 months ago" and "what kind of seasonality did you find, where are the numbers on that?" and "how did advertising spend effect sales and profits" and a million other questions that I frankly didn't have off-hand as I was not prepared for them. It really opened my eyes to how little I was tracking that stuff and it really hurt me on the sale.

It's also much, much, much better to be selling on an up-swing than on a downturn. I mistakenly stopped pumping my business with the fuel I was previously because I was expecting a quick sale and didn't want to keep putting money into a business I was about to hand off. The result was that sales dipped, and the longer the sales process took the more the sales dipped and the lower the valuations I was getting. It's a viscous cycle. The less the business did the less I wanted to put money into it the less people would offer me the less I wanted to spend on the business the less..... etc...

Those were two huge takeaways from my own selling journey.
 

jsdev

Contributor
User Power
Value/Post Ratio
633%
Mar 28, 2017
9
57
Montreal
Another thing that I wasn't really expecting (but made total sense) was being able to talk about your numbers in extreme detail.
...
It's also much, much, much better to be selling on an up-swing than on a downturn.
Great points man. Gotta know those numbers in detail. Did you sell recently?
 

JAJT

Legendary Contributor
FASTLANE INSIDER
EPIC CONTRIBUTOR
Read Fastlane!
Read Unscripted!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
549%
Aug 7, 2012
2,970
16,306
Ontario, Canada
Did you sell recently?

Early 2016. It's a sad story.

Got a 6 figure valuation. Walked away with low 5 figures.

Worth it for the experience but between the business's declining valuation over the course of the sale and the broker's (excessive IMHO) fee I'd call it a hard learned lesson in how I wouldn't do things next time.
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

Greg R

Act, Assess, Adjust
Read Fastlane!
Read Unscripted!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
465%
Oct 28, 2015
1,060
4,933
Puerto Vallarta, Mexico
Just got done with a failed transaction as a buyer that was six months long. Everything in this thread is true.

I truly believe that the seller needs to be just as educated as the buyer when they got to sell their business.
 

jsdev

Contributor
User Power
Value/Post Ratio
633%
Mar 28, 2017
9
57
Montreal
Just got done with a failed transaction as a buyer that was six months long. Everything in this thread is true.

I truly believe that the seller needs to be just as educated as the buyer when they got to sell their business.
Can you give any details as to why your purchase failed?... Agree education is key, good advice is hard to find. That's why I recommended clarity.fm
 

Greg R

Act, Assess, Adjust
Read Fastlane!
Read Unscripted!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
465%
Oct 28, 2015
1,060
4,933
Puerto Vallarta, Mexico
Can you give any details as to why your purchase failed?... Agree education is key, good advice is hard to find. That's why I recommended clarity.fm

I've wrote about it in full detail in my progress thread, but that thread is only available on the inside.

Basically the seller and I were really far apart on the valuation of his business. After I did my research, I found out that the seller wanted significantly more than what he should be selling for. I thought that since he had a really high price, he was going to be more flexible on the terms. I could not have been more wrong.

When it came to negotiating the Purcahse and Sale Agreement, it all fell apart because even the terms that he wanted were off the charts compared to what the industry was doing.

I finally had to quit trying to neg lower and walked away.
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

ddzc

Gold Contributor
Speedway Pass
User Power
Value/Post Ratio
216%
May 22, 2012
577
1,247
Toronto
I’m coming out of the shadows to give some value back. I owe a lot of this forum.

I got my start in ecommerce a back in 2013 when I read @biophase first ecommerce thread.
I won’t go into details of getting started in ecom, as his threads cover the fundamentals, and he knows his shit.

So I want to share my experiences in selling an ecommerce business. This is not the blueprint to sell every business, so please do not gamble your business life and take my words as gospel, but mine went down smooth, so I wanted to share.

So knowing what I know now, BEFORE you sell your business..

1. Know why you want to sell. Buyers will ask you this. As a rule, it's better to be transparent, and not bullshit your buyers.
2. Have clean books from day one & have a great accountant. I wasted a lot of time and ultimately money working with a cheap bookkeeper who was a hack. When I was looking to sell it took a lot of time and money with a new accountant to clean up the mess. Get in the habit of tracking your financials on a monthly/quarterly basis and don't skimp on this expense.
3. Have strong relationships with your suppliers: Over the years I worked with my suppliers, I always put a lot of effort into the relationships. Get to know everyone who works there on a personal level. This paid dividends during the sale. When it came down to transitioning from me to the new owners of the business, it went flawlessly.
4. Have an Idea of what you want for the business before you sell- Could be 1x-10x profit. There’s no right or wrong answer here, it comes down to you and your lifestyle. Do your own research, and know what you want coming in. Talk to as many people as you can about this one, not just your broker.
5. Know the kind of buyer you want. For me it was very important to have someone who I like as a person, is tech savvy, and understood the risks In buying an ecommerce business. I’d take a and positive business relationship over an adversarial one as I'll be able to do business with them again in the future.
6. Find a good business lawyer. You will need them later in the process when it comes to contracts.

So knowing all this, here’s how my deal played out...

First, I Hired a business broker. I managed to find a good one, but not before interviewing some shady characters.

Some broker red flags:

  • Some will pressure to put a lower price so they can flog the business quicker.
  • Another broker talked extensively about selling to “dumb buyers,” and withholding the realities of running an ecommerce business to get the sale through quickly. FYI, ‘dumb buyers‘ are people who think they can buy an online business, sit back and watch the money roll in. I decided to stay away from these buyers as the transition would be very difficult.
  • Another red flag is a broker suggesting you don’t need a lawyer because they only slow things down and overcharge. True, they might be expensive, but its better to cover your a$$ and have a 3rd party to look over contracts.

So choose a reputable broker. Look for red flags. Trust your gut.

Next stage, I worked with the broker to develop a 'blind-summary’.
This is well presented booklet a buyer will see after signing an NDA, this can include:
  • Monthly income statements trailing 36 months
  • Screenshot of Google Analytics traffic (unique sessions) last 24 months
  • Screenshot of Google Analytics showing traffic sources (organic, PPC, etc)
  • A summary of the history of the business, challenges, big wins, growth opportunities.
After this, my broker promoted the business for sale. Potential buyers would sign the NDA and read the summary. Those interested would organize an introduction call for 30 minutes.
This stage took about 3-4 months to find the right buyers.

When a call took place, It usually got stated with questions like:
Business Background, why am I selling, how the day to day works and where the opportunities are to expand.

The important thing here is be straight up. I was very open about how you could expand the business, and what I would do over the next 3, 6 and 12 months.
In saying that, you do not need to give away every little specific detail of the business, and your broker should be schooling you on how to conduct yourself if they are worth a dime.

I got a mixed bag of potential buyers on those first calls. Some were a good fit. At the other end of the scale, there was the dreamers, borrowing 100%, who could hardly use a computer. I would politely talk them out of it.

It helps if you are screening during the initial call, as you are less likely to come across as desperate to sell.

Those who got past the call stage would come meet me and the broker at the business for a tour. Only 2 buyers got to this stage.

I had a good feeling about one of the buyers, so we went to have a meeting with the key supplier and a tour of their facility, who were excellent (because I had invested in the relationship) and took the time to answer any questions the buyers had... they did the selling for me.

After that, an offer came very quickly. First offer was exactly what I wanted and I accepted it.
The saying is ‘never accept the first offer’, and I’m sure I could negotiate more, but I felt I got what I wanted and was happy to be out.

So contracts were drawn up by lawyers, terms were negotiated and we both signed.

Next stage, I worked with the business for a week to get them set up. We negotiated that I’d be available on site for 10 working days (9-5), and over the phone for up to 3 months.

  • Just in your contract, Be specific in the times you are available, if you sell to an a**hole, they might insist you stay on site 24 hours a day for 10 days and can call you at midnight every night for 3 months. This is where having a lawyer is useful.

In the end, I was only there for 3 days, and have answered about 5 emails since. My buyers are pretty awesome. So overall, it could not have went any better.

What am I doing now?

The business really took over my life for a few years, so I’ve gone back to go university and finish off my degree, and plan to start a new venture after that. To keep sharp I continue to work as a developer & marketer for a few ecom clients.

Recommended Resources

Biophases ecom threads.
Built to Sell
How to win at sport and business.
Every Episode of The Profit.
Ezra Firestone’s stuff. He’s great for paid traffic.
Clarity.fm .. Best website on the internet.
Ecommerce Fuel podcast.

Looking back now, a big turing point in my life was reading this forum. So feel free to hit me up, always got time for anyone in the trenches.

Great thread and gl to the Habs next game!

I have a question. What software or tools do you recommend to properly organize and keep track of sales, all expenses, marketing, advertising, etc, which would be useful for not only the sale of your business to provide to a potential buyer, but for accounting and organizational purposes also. I have a bad habit with using excel for everything and I need to start using proper software to manage the numbers.

Thanks!
D
 

jsdev

Contributor
User Power
Value/Post Ratio
633%
Mar 28, 2017
9
57
Montreal
Great thread and gl to the Habs next game!

I have a question. What software or tools do you recommend to properly organize and keep track of sales, all expenses, marketing, advertising, etc, which would be useful for not only the sale of your business to provide to a potential buyer, but for accounting and organizational purposes also. I have a bad habit with using excel for everything and I need to start using proper software to manage the numbers.

Thanks!
D

I used Xero for all accounting, synced up with my stores and was able to reconcile expenses easily. I was pretty much all adwords for advertising, so I just kept an eye on that too. Other than that I didn't have to track too much else, so it wasn't hard to transition the data.

One product I would have loved would be a real time dashboard that tracked my daily sales. I'm sure there's an app for it now.

A client just showed me Microsoft Power Bi today, he syncs it with Xero and the level of detail he has been able to go to is insane. If you are an excel wiz give it a go. Power BI | Interactive Data Visualization BI Tools
 

amp0193

Legendary Contributor
FASTLANE INSIDER
EPIC CONTRIBUTOR
Read Fastlane!
Read Unscripted!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
444%
May 27, 2013
3,639
16,158
United States
One "scam" I encountered when looking for brokers, was trying to hook me into a 6-month exclusive by quoting me an unrealistic sale multiple upfront.

If it sounds too good to be true...
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

JAJT

Legendary Contributor
FASTLANE INSIDER
EPIC CONTRIBUTOR
Read Fastlane!
Read Unscripted!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
549%
Aug 7, 2012
2,970
16,306
Ontario, Canada
One "scam" I encountered when looking for brokers, was trying to hook me into a 6-month exclusive by quoting me an unrealistic sale multiple upfront.

Sounds a lot like what I experienced.

Although I negotiated the time frame almost in half, it was still a high multiple and the sale took far longer than I wanted. Honestly at the time I figured if I walked away with half I'd have still been happy so I took it. Didn't even get that.
 

QDF

Gold Contributor
Speedway Pass
User Power
Value/Post Ratio
401%
Jan 1, 2014
363
1,454
Some great advice in here so far.

Anybody have any experience with Empire Flippers specifically?

They seem to be among the most credible brokers for ecommerce. I talked to a sales rep once to get an idea of what I'd need in the case of selling my business (for future reference) - didn't go any further than that though.
 

amp0193

Legendary Contributor
FASTLANE INSIDER
EPIC CONTRIBUTOR
Read Fastlane!
Read Unscripted!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
444%
May 27, 2013
3,639
16,158
United States
FWIW, here's what my current broker had to say about Empire Flippers:

"Empire Flippers is a marketplace. You do not get one broker to handle every aspect of your transaction. We build valuable, trusting relationships with buyers and they want to buy from us. Empire Flippers does a great job with content development and have created an interesting and different listing model. It may work well for a sub $100,000 listings. Higher value listings need a broker that builds trust in both buyers and sellers and is there from the development of a detailed Marketing Package all the way through to closing. QLB drafts the LOI and APA - saving clients $1,000s in legal contract development costs."
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

Post New Topic

Please SEARCH before posting.
Please select the BEST category.

Post new topic

Guest post submissions offered HERE.

New Topics

Fastlane Insiders

View the forum AD FREE.
Private, unindexed content
Detailed process/execution threads
Ideas needing execution, more!

Join Fastlane Insiders.

Top