5 Tools to Help You Exit Your Digital Business
Preparing your business for sale can be hard. These tools can help you.
Planning for a business exit can be an intimidating process, but there are many tools and services out there that can alleviate some of the burden. I've spent most of my career helping facilitate the exits of online business owners, so I have unique experience teaching people how to present their business to potential buyers in the best light. I've also learned the tools to help during the process, and these are five of the best. One is a service the company I founded offers, but the other four are simply tools I highly recommend to clients.
Getting a thorough valuation will be one of the most important parts of your exit process. Valuations for online businesses are often trickier than their brick-and-mortar counterparts as the business models are new and diverse and affected by hundreds of “valuation drivers.” There has long been a lack of accurate valuation services for mid-sized online businesses (any business earning between $20,000 and $3.0 million a year). Smaller businesses will often try their luck on auction-style marketplace sites and let the market decide their value, but this won’t be appropriate for many business owners. Using a free valuation service like the one offered by FE International (full disclosure – this is the firm that I founded and helped build) will help provide a valuation that allows you to better plan for your exit process.
Remember, your business could be worth more than you think.
One trick to ensuring you get the maximum amount possible on the sale of your business is to make your own position as the founder as redundant as possible. A business will be much more attractive to a prospective buyer if they know they will have to work minimal hours in order to keep the business running. Therefore, it is worth attempting to outsource the tasks you perform at the most reasonable rate possible, despite the overall increase in costs to your business. A tool like People Power can help you track down the most qualified people for a wide variety of business-related tasks.
Having thorough SOPs in place will help with any transition to a new owner and will make your business more attractive to potential buyers. Many buyers will be concerned about taking on a business they are not already familiar with; being able to share SOPs (or at least list the ones you have) will do a lot to ease their concerns. Once you do sell your business, it's fairly standard practice to make yourself available to the new owners for a period of time to help them get comfortable with the business. A good SOP tool can help you reduce the amount of time you will need to spend onboarding a new owner.
This tool will help you a lot with your exit, as will most financial tracking tools, but the earlier you start using it the better. Many online businesses start as a side hustle before becoming a more serious enterprise, so financial tracking often isn’t taken seriously until the business is making real profit. The gap in financial history can have negative effect on valuations and the sales process. The key is to start tracking your finances as early as possible. Early gaps are not necessarily the end of the world, but having a well-presented financial history will do wonders for buyer confidence. Xero is a particularly simple platform with an intuitive mobile app for when you are on the go.
Planning ahead may seem counterintuitive when you are looking to exit a business, but it is essential for two reasons. The first is that having no plan for the next few months and taking your foot off the gas is one of the classic ways to lower your business valuation and make a sale harder. You need to keep the pressure on despite having to organize your exit, hence the need for a solid business plan for the next few months.
The second reason is that a business with a fleshed-out roadmap will be easier to sell to prospective buyers. A buyer will want to do as little work as possible for maximum results, so if you can create a plan for how you would look to grow your business in future — and the pitfalls to be avoided — it will go a long way towards making your business into an attractive investment.
There are many other tools that could help you organize you exit, but this is a selection of some of the ones that may come in handiest. Most of them are either free or have free plans and trials. Being organized about your exit and getting all the appropriate documentation in order before you begin your search for potential buyers will benefit you financially in the long run. Remember that the final phase of your time as an owner of a business is no time to start slacking off. Keep the pressure on and use the best tools possible to make your life easier.
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