How to Sell Your Amazon Business for Maximum Profit?
- August 2, 2019
- Posted by: admin
- Category: Business & Digital Marketing Tips
Deciding to sell your Amazon business can be a straightforward task if you do it correctly.
All you need is to take the right steps, make the effort to do your due diligence, and partner with the correct online business.
However, “straightforward” does not mean easy nor fast; it just means that you are able to avoid as many pitfalls and as much headache as possible.
Just like any traditional sale, selling your Amazon business takes time, and there are a host of factors that will affect the final outcome of your sale.
Here is what you need to keep in mind if you’re asking yourself, “how can I sell my Amazon business for maximum profit?”
What Factors Will affect the Value of my Amazon Business?
The price tag that you can place on your Amazon business will ultimately be decided by two things:
- the relative risk that the buyer will take on by purchasing your business, and
- the return on investment (ROI) that they will be getting.
As with any smart business move, buyers will be looking for an Amazon business that offers them the highest ROI coupled with the lowest risk possible.
Here are some of the factors that a potential buyer will look at to help them decide whether or not they will purchase your Amazon business:
Buyers want a business that has been around for a while because it speaks to the stability and the marketability of a brand.
Businesses that have been around for three years will have a stronger track and sales record compared to businesses that have only been around for one, and buyers will be able to get a more accurate prediction of how a long-standing business will perform in the future.
Companies that have a small, concentrated, and hyper-competitive niche will also have small and concentrated target markets, compared to companies that sell products with mass-market appeal.
Buyers are wary of hyper-competitive niches because it also limits their own pool of potential customers who will buy their product.
3- Concentration of Products
If you have a business that’s composed mainly of a single product, buyers might be wary of the higher risks involved.
Generally, the more diverse a company’s product portfolio is, the less risk there is and the higher the price you can command from your sale.
Having your own registered and legally-protected brand will make your business will make it stand out with consumers, thus making it more attractive to buyers.
You will certainly have a stronger presence online compared to companies that are selling mass-produced and generic products.
5- Amazon Best Sellers Rank
If you already have the Best Seller’s Rank (BSR) attached to your business, this is a strong signal to your potential buyers that your company has a great reputation with Amazon for both quality products and good customer service.
If your business has reliable and trustworthy suppliers that are able to deliver the raw materials on time and in the required quantities, this is another bonus point in your favor with potential buyers because it means that they will not need to look for suppliers on their own.
How do I Maximize the Value of my Amazon Business?
Once you have determined the value of your Amazon business by getting it valued as well as analyzing the factors mentioned above, there are still steps that you can take in order to maximize your profits from selling your business.
Here are three steps that you should take in order to maximize the value of your Amazon business:
1- Create a separate company
If you have not done so already, registered your business as an LLC or a Limited Liability Corporation.
This means that you will not be personally liable for any debts or liabilities that the company has once the sale is completed.
The buyer will be buying your company and your brand on Amazon, but they will not be legally entitled to hold you to any unforeseen problems that will arise after the sale.
2- Highlight minimized buyer risks
Buyers will appreciate any steps you have taken to reduce their risk in buying your company. So, even if it will take a little bit more work on your part, make sure that you document all the work you have done to diversify your business as much as possible.
If you have multiple suppliers, multiple marketing channels, and multiple sales channels, all of these are welcome aspects to your business.
3- Keep people and processes (that work) in place
Buyers will also appreciate a business that is working as autonomously as possible with as little help from them as possible.
It will be another bonus point in your favor if you can assure them that even once you’ve exited your business, all the processes and people you’ve put into place that keep the business running will stay with the company.
How do I Prepare my Business for the Final Sale?
Once you have finally decided to sell your Amazon business, there are still some crucial steps that you need to take in order to ensure that you will be getting the maximum possible profit from the sale.
Here are three more important steps that you need to do, assuming that you have done all the steps mentioned above:
1- Catalog your remaining SKUs
You need to take stock of the remaining SKUs in your inventory in order to maximize the gross margins that you can get from the sale.
It will be time to remove stale or old stock, as well as unprofitable products as these will hamper your final sale.
A buyer will appreciate thorough information on your remaining SKUs.
2- Get your books in order
Aside from providing documentation on your past track record of selling, you need to make sure that your accounting is transparent and open to scrutiny. As you can be sure that any buyers will want to take a look at your financial history to look for signs of problems.
Remove as much liability as you can such as unpaid taxes or unpaid supplier invoices, as these should not be part of the new buyer’s purchase.
3- Hire a lawyer (in addition to the broker)
While having a reliable and trustworthy broker will help you immensely during your sale, it will also help you to hire a lawyer who is knowledgeable and experienced in handling online business sales, particularly for Amazon businesses.
They will help you navigate through the tricky world of laws and regulations handling Amazon-based businesses, as well as ensure confidentiality and legal safety during the process.
Now you know all about valuation, exit strategy and sale options for your Amazon business, the best way to get a good sense of how much your business is worth.