Launching and scaling an Amazon business is exciting!
But is it truly worth it if, when it comes time to sell your Amazon business, you shortchange yourself … and don’t get the amount of money it’s really worth?
Selling on Amazon is one thing. But unless you know how to sell your Amazon business, being the master of the universe at selling products is a wasted talent.
In this article, we’ll be going over everything you need to know about how to sell your Amazon business so that you’ll be in a better position to take your time, and get the price you deserve as you exit your business.
Timing is so crucial when it comes to selling an Amazon business. If it’s the wrong time to sell, you’ll struggle to attract buyers, and you won’t get the price you want.
If it’s the right time to sell, on the other hand, you’ll find it easier to sell, and you’ll also get a price you want.
An Amazon business is a bit like a vintage wine: The older it is, the more valuable it is.
This is because a young, fledgling Amazon business has so little mileage that a prospective buyer who’s running the rule over it might be concerned that it simply has no traction and no clear path to success.
On the flip side, an Amazon business that’s been around for a few years and has amassed hundreds/thousands of positive customer reviews has clear staying power – and, crucially, a clear ROI. This then allows a prospect to make a more accurate prediction in regards to how much profit they can expect to make.
If your business is too young, then, the tip here is to keep working on it and demonstrate a visible ROI to potential buyers.
This is a key question.
When an Amazon business isn’t really automated, it means you will be doing most of the legwork.
For example, a concerned prospect might ask you how many hours you put in each day and week to support your business.
If you put in a solid 35+ hours a week, it suggests your business isn’t automated.
In other words, it can’t really function without you.
This is bad news to a prospect because it means that if they take over your business, they’ll then be working 35+ hours a week.
And no buyer is looking to take on a full-time job here.
As such, before you sell your business, it’s really important that you automate it.
There are a few different types of Amazon businesses and – no – they don’t all hold the same appeal to buyers.
In fact, a private label business is by far the most appealing because this is your brand. It’s not just another faceless entity on Amazon that could be eaten up by a rival who’s optimising their product descriptions better than you.
Other types of Amazon businesses include arbitrage, wholesale and drop shipping which are all, essentially, resellers. These types of businesses will still sell, but you might have to work harder to sell yours.
It’s not easy to accurately gauge how much your Amazon business is worth if you’re a first-time seller, which is why we highly recommend that you work alongside an advisor or broker who can do this for you.
However, a general rule of thumb is to take into account your net profit for the last twelve months and your multiple.
Your multiple is generally 2.5 or 4.5x your annual net profit. The more profit you have, the bigger your multiple will be.
But while things like your supply chain and SKUs can bump up your multiple, it’s again advisable to work alongside experts to help you get an accurate valuation of your business.
There are also free valuation tools you can use to help.
You can either sell your Amazon business all by yourself, or you can work alongside an experienced broker.
We highly recommend that you choose the latter option, and there are a few reasons for this: Brokers are highly experienced at selling Amazon businesses just like yours. They’ve done it before – and they’ll do it again.
What’s more, because an experienced broker has sold multiple businesses, they know how to get the right price, and they also know how to negotiate deals swiftly.
Not just that, but one of the biggest stumbling blocks to successfully selling an Amazon business is finding legitimate buyers. Brokers have a wide range of contacts, and they know where the serious buyers are.
Lastly, a broker has two goals: To make you happy, and also to make the seller happy. Sure, they charge commission but they only take home money once a deal is over the line.
Whether you decide to sell alone or with a broker, it’s still super important that you sort your finances out first before putting your business up for sale.
This will not only ensure you accurately price up your business, it also means that any potential buyer can see exactly what your incomings and outgoings are. When they can see this information, they’ll have more confidence in your business.
If you’ve decided to go it alone, the final step is to find a buyer.
But while there are undoubtedly customers who express interest in your products, finding someone to buy your entire business is trickier.
You can talk to fellow Amazon sellers and ask if they can connect you with potential buyers, and you can also use classified sites and online marketplaces.
Ultimately, however, working with a broker is the safe, easier and faster option. They already have a network of buyers who are interested in businesses just like yours, and they will also help you to fine-tune aspects of your business that make it more attractive to the market.
If you’re still in the process of developing and scaling your Amazon business, now probably isn’t the right time to sell.
However, even if you’re at the beginning of your Amazon journey or in the middle, it’s really important that you think about exit strategies and optimising every inch of your business as soon as possible. It’s only by properly preparing your exit that you’ll get as much joy out of running your Amazon business as possible.
And when it is the right time to sell, working with a broker to help you price up your business, find buyers and negotiate a deal that works for all parties is often the smart way to go.
Ready to sell your business for the best possible price? Start by clicking the link below! No obligation, no hard sell. Just solid, professional advice.