EcomExit

2010 looks to be a better year than 2009 to sell your internet business.  Inquiries for internet business listings have poured in over the Holiday.  It seems that once 2009 was behind us a little pressure was lifted from everyones shoulders, and we could re-focus on ecommerce as usual.

The Holiday season was better than expected for most ecommerce business owners, and the increase in sales helped end the year strong.  Growing you ecommerce business prior to and during its listing for sale is important to ensure potential buyers that business is strong and stable moving forward.

With ecommerce sales strong in late 2009 and a forecast for a strong 2010 internet business valuations should begin to increase in mid 2010.  If an exit strategy is in your future now is the time to begin to plan for a successful sale.

September was predictably slow with a late Labor day weekend and the signal of summers end.  October has already been relatively upbeat with an increase in ecommerce business buyer inquiries as well as a hand-full of new internet business sellers entering into conversations with associates or beginning the process to prepare their internet businesses for sale. 

There are signs of life in lending, the SBA has raised the goodwill cap, their is movement in the secondary market for loans.  With the Holiday season typically bringing ecommerce business brokerage to a slow crawl from mid December through early January there is still 60 days left to successfully complete the purchase or sale of an established ecommerce business in 2009.

We are anxious to see how 2010 will start and what sort of mentality buyers and sellers bring to the internet business for sale marketplace early in the new year.

We are exited to have partnered with two new affiliates that provide new services to out buyers and sellers.

A link to Richard Parker's due diligence checklists and internet business buying guides can be found
here.

Buyers and sellers looking to improve there knowledge about SEO and other search marketing may be interested in classes from searchenginecollege.com, a link can be found here.

Richards resources are great for individuals looking to buy an internet business, speaking on topics such as ecommerce business acquisition criteria, ecommerce businesses evaluation, dealing with internet business brokers, negotiations, Internet business valuation, etc.  There is not a better buyer guide out there for someone looking at purchasing an Internet Business for sale.

Searchenginecollege.com provides both certificate and self-study courses, topics include SEO, PPC, keyword research, website design, website copyrighting just to name a few.  A great opportunity for a new buyer or existing businesses owner to become more familiar with intermediate to advanced search engine marketing.

Internet Business Valuations can be based on a number of factors.  For established Internet businesses with a focus on retail multiples of earnings, also known as SDE (sellers discretionary earnings), net profit, or cash flow.  Currently Internet business valuations based on cash flow range from a 2.5-3.5 multiple of earnings.  Higher multiples are usually found with Internet businesses exceeding 100,000 in net profit, experiencing rapid growth, or having other distinguishing features.

Current website design and rich media features can also play a role in establishing a multiple of earnings.  Websites that are designed well and optimized for user experience will be able to reflect that value in an asking price. That being said it is important that rich media be used effectively and be relevant to the user experience on the particular site.

Internet businesses informational in nature or based on acquiring revenue through visitor traffic (affiliate revenue or Google's Adsense) may appeal to the cost of acquiring traffic rather than a multiple of earnings.  Often a multiple for a business of this nature exceeds the 2.5-3.5 multiple of retail based businesses.  A company with quality organic rankings can continue to provide this low cost traffic for a significant period of time with less risk of drop-off.  An acquiring company will be able to benefit from this low cost traffic for many years, and the competition for page 1 organic results continues to increase.

Start-up opportunities may be valued based on a combination of site design, initial revenue, ease of entry, back end software, website features, and sweat equity.  Often times a start-up opportunity provides a low-cost entry into e-commerce, and allows a buyer to immediately begin focusing on growth through advertising rather than spending months researching products, suppliers, products and developing a site accordingly.

Every ecommerce business will have a different value to individual buyer prospects.  If, as a buyer, you are interested in an opportunity it is not unreasonable to make an offer based on what the business is worth to you.  A seller can make a counter offer, accept the offer or at the very least begin a buyer seller  dialog.  Business valuations will also vary by Internet Business broker, it would not be surprising to find five different Internet business brokers come up with five different valuations for the same Internet business.  Usually, sellers leave a cushion for negotiations in an asking price but it will take an offer by a buyer to begin the negotiation in order to "feel out" the seller and determine if a deal acceptable to both parties can be reached.

Richard Parker, whose blog can be found at www.bizquest.com, has written a buyers guide for the purchase of an Internet business, with experience in both sell and buy side representation Richard's materials are easily understood by both new and experienced buyers and provides some great insights into the buying process.

If you are an Ecommerce Business owner and find yourself wanting to increase the value of your online business then this is the post for you. There are several important main ideas to keep in mind, but the main rule of thumb you should remember is that an Internet Business is only worth what someone is willing to pay for it. This is a simple concept that many people often forget about after falling in love with their Online Business that they put blood, sweat and tears into. Rightfully the Ecommerce Business Owner should receive a fair market value for their Internet Business.

 Keeping this rule in mind, the next logical question to ask is: what is value to those looking to purchase an Ecommerce Business?  Most people find value in strong earnings, web presence and a well established customer base; just to name a few items.  Purchasers of Ecommerce Businesses will not pay for the potential it has, that is their gamble. They are paying for the labor that the previous Internet business owner has put into it. The growth potential for the Ecommerce Business brings an element of excitement to the new online business owner.

Now, how do you go about increasing these aspects of value? Market your online business through email promotions and build the customer base with targeting specific products at a different audience, create better community which is interacting with the Internet Business. Interaction also increases sales; the more you look at a product the more tempted you are to buy it. Spend some time with the customers, “showing them the love” after they have bought your products. Email them and let them know you care and check up on their shopping experience. This can be done through an automated email message or a quick survey at the end of the cart. 

The Internet Allowing Huge Growth for Any Online Businesses

            One of the key attractions to an internet business is the potential for large growth. The key to online business growth is through reaching the right online market and then placing the product and/or website in front of as many people as possible. Asking yourself if you are reaching your online target market is crucial. Also, are you reaching them and then constantly reminding them of your great product? I receive a “latest deals” reminder several times per month in my email encouraging me to buy products for a fun hobby of mine. As annoying as I may find the ecommerce advertising, I have bought as a direct result of the ads on two separate occasions and have spent plenty more after having a good experience with the ecommerce business.  

As a general rule of thumb, the more eyes that see a product or internet business as a whole, the higher you can expect the revenue of an Ecommerce Business to be. Actionvillage.com has been highly successful marketing to the extreme sports junkies and is in the Internet Retailer Top 500 Guide. In early 200 they were not nearly the size that they are now, how is this possible with a relatively small audience compared to traditional sports such as baseball, basketball or football. This ecommerce Business is selling the audience on its product and reminding them constantly to buy. 

            When thinking about purchasing an Internet Business, a major consideration should be where is it in the growth stage. Is the Ecommerce Business ready to bloom with some more work? This is a question that many Ecommerce Business Buyers are constantly asking themselves. An Ecommerce Evaluation can work wonders to aid in the search for the answer. Having a third party with no emotion involved in the online business will give very good, real feedback. This brings value to the internet business, especially when purchasing an ecommerce business. An evaluation shows buyers that they are getting value for their dollar. This will also help them determine how well they will be able to grow the Ecommerce Business. 

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We are excited to have several new ecommerce businesses for sale.  If you are interested in buying an online business please browse our LISTINGS.

The end of July and beginning of August have set a record number of inquiries both from buyers looking to buy an Internet business as well as seller who have successfully weathered the economic climate and are looking to sell an internet business.

Check back frequently for new listings or contact us through our website to submit your acquisition criteria and receive our Internet Business Listings Update.

We are excited to be working with several ecommerce vendors to provide to our clients third -party website evaluations.  These website valuations will range in depth and scope based on a businesses size and complexity. 

We believe these outside ecommerce evaluations will distinguish our clients opportunities from the rest of the Internet businesses for sale.  We are willing to put or money where our mouth is so to speak and subtract the cost of these website evaluations from or commission.  We strongly encourage all of our clients to consider some sort of third party evaluation.  Providing a potential buyer with a professional evaluation from a third party source can serve to highlight the opportunity as well as provide potential buyers with a true understanding of the business.

As an Internet Business Broker we have the in-house ability to evaluate our clients opportunities, however, having a third party evaluate the marketing, and design of an ecommerce business as well as build a proposal to grow our clients Internet business should be much more compelling to buyers.  Buyers are able to have a third parties opinion of the state of the business as well as a road map for growth.  By choosing the right website evaluation a seller is able to secure a document that will truly set apart the marketing of his/her Internet business for sale; lending credibility to asking price, reducing the transaction timeline, highlighting opportunity, and providing a third party opinion.

It has been interesting to watch the increase in buyer response to Internet companies for Sale over the two weeks.  It is not surprising that we have seen an increase in inquiries at the same time that the stock market begins to trend up.  Buyers no doubt are beginning to feel a little more comfortable with the state of the economy and do not want to miss out on the "Buyers market"

Traditionally, summer can be a little slow ,ecommerce business sellers and potenial Internet business buyers take off on family vacations, holiday weekends, and everything else in between.  This year has been slightly different with both buyer and seller inquiries picking up significantly after the July 4th weekend.  With the recession people may just be sticking closer to home this year. 

If you are considering selling your Internet business the timing may be right sooner rather than later.  With an increase in buyer activity, a rebounding stock market, and a fast approaching holiday season getting your ecommerce business live to market now will leave time for negotiations, closing, and new owner training before the holiday rush.

It should be no surprise that a tremendous amount of importance is placed on gross revenue and net profit when selling an ecommerce business, or any business for that matter.

When we do ecommerce valuations for our clients the financial performance of a business is the key indicator of value.  Key features can effect the business value positively or negatively but there is no substitute for cash flow. 

Since the profitability of a company drives the majority of value and since the asking price is going to be some multiple of earnings, it is important to grow an ecommerce business prior and during the sales process. 

Growth achieved in the twelve months leading up to marketing an ecommerce business for sale will have a higher ROI than at any other time.  The average ecommerce or Internet based business sales for around a 3.5 multiple of earnings, so if you generate more earnings for your business in the year before a sale your return on investment will be multiplied.

If you generate $50,000 in gross revenue from an investment in lets say additional marketing and that puts $10,000 more to the bottom line as pure profit.  That investment made you $10,000, however if your ecommerce valuation uses a multiple to arrive at a business value that $10,000 of profit added to the bottom line creates $35,000 of business value based on the average ecommerce multiple.

If you plan to sell your ecommerce business it can be extremely worth while to give one more serious marketing effort, optimize the site, ad campaigns, landing pages, emails, etc.  Any profit you squeeze out of your business could be returned at significant ROI.  AND better yet if you are thinking about selling get with a broker as early as possible.  Some of our clients have been able to add tremendous value to their ecommerce business by creating a planned exit strategy.

We are excited to have seen an increase in SBA loans for Internet-based and e-commerce businesses.  With the $250,000 Goodwill cap it had seemed unlikely that an e-commerce business could qualify for SBA with a lack of tangible assets.

After speaking to some very experienced SBA lenders, who have recently closed Internet business SBA deals, it seems like SBA could be a financing option for buyers looking to buy online businesses.

If you have questions about buying or selling e-commerce or Internet-based business do not hesitate to contact one of our experts.

Evaluating an E-commerce business is important to both owners of ecommerce businesses looking to sell an Internet business as well as potential internet business buyers.

Traditionally "cash flow is King" and the main value driver for brick and mortar businesses.  Cash flow is equally important to Internet businesses and so is other traditional analysis like competition, customer concentration, market stability, scalability, historical preformance, and potential for growth.  The major diffeence in evaluating ecommerce vs brick and mortar businesses is how the store front of the business is evaluated.  Just as the physical location of a business can play a significant role in preformance so can the website and marketing strategy of an ecommerce site.

The website is an internet storefront.  careful attention must be paid to design and usability.  Not every new web 2.0 or rich media feature is appropriate for every e-commerce business.  Websites should be easy to navigate, ddesigned with conversions in mind and set up to continually drive visitors down the sale funnel. 

It is often appropriate to Benchmark sites against competition in the industry, and other succesull ecommerce sites.  Ecommerce Benchmarking can highlight both areas in which an online business compare favorably as well as under preforming areas.  Benchmarking sites can also allow owners positioning their internet businesses for sale to understand where it may be appropriate to focus resources, buyers can get an accurate picture of an internet opportunity as it compares to others and use the benchmarking information to plan how best to implement working capital to grow an online business they may be considering purchasing.

EcomExit's Ecommerce eValuation is a combination of traditional analysis, including financial analysis, competition, customer concentration, potential for gowth as well as intangible analysis like site design and usability, web 2.0 features and appropriate rich media as well as ecommerce benchmarking analysis against industry competition and top preforming ecommerce reatil sites.  All of our Internet Business listings have our eValuation allowing both buyers and owners to understand the opportunity completely and reducing the time neccesary for due diligence and discovery.

After many months of discussion EcomExit is excited to announce that it is rolling out an exclusive buy side representation Program.

Our buy side representation program begins with discovery sessions to help buyers uncover  acquisition criteria.  Once acquisition criteria has been clearly defined EcomExit will preform a weekly database search on subscription business MLS portals to look for opportunities that may fit a buyers criteria, in addition to signing up for automatic email alerts for new listings with matching criteria.

Once an opportunity has been found we will work with the sellers agent to collect all the business details including financial statements and tax returns.  EcomExit will preform our own in-house eValuation of the website and provide our opinion and analysis of the current Internet marketing and e-commerce capability.  We will provide our suggestions on growing and improving profitability.

When a buy side client is ready to pursue an opportunity EcomExit will handle the negotiations and closing arrangements.

Our services are designed to reduce the time cycle of the business buying process.  Many buyers spend months or years waiting for the perfect business to come along.  Our service will help buyers outline there own acquisition criteria and find opportunities that meet those.  Our eValuation will highlight both positive and negative aspects of an opportunity giving buyers a clear picture and our recommendation will outline ways as a new owner for the buyer to grow and improve the business.

The goal of or service is to provide an affordable buy side representation that allows serious buyers to quickly find and evaluate appropriate opportunities, make informed decisions, and ultimately buy the right business for them.  For more information do not hesitate to contact one of our buy side representatives in person at www.ecomexit.com/dm

Hello world,

We here at EcomExit are excited to have launched our blog.  We are looking forward to providing information  about Internet business brokerage, buying or selling ecommerce or Internet based businesses, tips for preparing your ecommerce business for sale and everything else ecommerce or business brokerage related.


At the Internet Retailer conference last week I was able to meet many main-street ecommerce business owners.  Those who were just starting their businesses were curious to learn about brokerage in general, the services we provide, and how to position themselves to sell in the future. Traditionally business brokers have held the responsibility of advising owners on business value, helping prepare marketing materials for potential buyers, confidentially marketing the business for sale, negotiating with buyer prospects and helping buyer and seller handle the closing.

We often compare preparing your online business for sale to  getting your house ready to sell.  A good cleaning, catching up on maintenance, maybe a new coat of paint, and sometimes a new roof, a bathroom remodel, or new carpet.  Preparing your ecommerce business is on many levels very similar. 

You want to tidy up your bookkeeping, possibly invest in taxes since your P&L are going to need to be authenticated by tax returns.  While every business owner wants to show the least amount of profit to avoid tax consequences, when it comes time to sell it is important to validate earnings and to be able to show ecommerce buyers what the future earning potential of your opportunity is.  while nobody like writing large checks to the IRS when you are talking about a 3 to 4 multiple of discretionary earnings  investing in your tax returns before you begin the sell process will make up for itself.

Get bad debt, discretionary expenses of the books or document  so that there is no confusion to potential buyers that expenses in question are not business related.

All the maintenance you have put off on your site, maybe new landing pages, site redesign, new videos, better product page, any rich media you have considered adding- These are all great things to do prior to taking your opportunity to market.  Just like curb appeal you want to put your best foot forward and go to market as strong as possible.

If you have put off a large site redesign, a new marketing approach or any other big ticket item A great time to invest in these value adding features is prior to going to market.  While on the market it is important that your sales remain strong, ideally increasing throughout the process.  Buyers can be very cautious if sales are declining or stagnating during the sale process often believing that there must be something wrong with the business if the owner is selling and sales are not increasing.

Preparing your business for sale correctly can make a substantial difference in both asking price and buyer inquiry.  Selling a business is a process, and it is important to start the process right- position your business in the best possible way.  Spending your resources wisely positioning for sale can mean a higher multiple of return making it worth a few extra hours and extra dollars spent.  Spend some time with your broker exploring your options, what are the current market trends, are buyers looking for certain features you have not implemented yet, what is the most likely best return on your investment, plan ahead. Plan to sell, make your business as attractive as possible to potential buyers.