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If you’re thinking of selling your website or online business at any time in the not-too-distant future, it’s worth taking some time to think about what will attract potential buyers. While there’s no one-size-fits-all formula for making a business more attractive to buyers, some strategies and tactics can help you make your site or online business stand out from the rest.
With the right approach, you can sell your online business faster and for more money. To do that, you need to think like a buyer and determine what they’ll want to see and what will convince them that your online business is a good investment.
Here are some specific ways to ensure your business is as attractive as possible.
1. Establish Positive Trends Before Selling
Your online business’s trends will significantly impact potential buyers’ interest levels. Sites with growing traffic and revenue are much easier to sell than sites that are declining. Strong upward trends can increase the amount buyers are willing to pay while concerning downward trends will lead to a lower valuation.
Brad Wayland, Managing Director and Senior Advisor at Quiet Light, spoke on the importance of trends, saying, “Growth trends run the show. If I have a business for sale that is in the middle of a growth trend that looks to continue, it will drive buyers more than just about anything else.”
With that in mind, it’s critical to establish positive upward traffic and revenue trends before attempting to sell. If your site is currently trending in the wrong direction, you may need to allow sufficient time to reverse the trends before selling.
Potential buyers will look at month-to-month trends as well as year-over-year trends. Since seasonality impacts many online businesses, evaluating year-over-year trends is the best way to get an accurate view of growth.
2. Offer Growth Opportunities
Online business buyers are investors. They want to see a strong return on their investment. Most buyers are looking for ways to significantly increase revenue and profit after taking ownership of the site. This type of growth allows buyers to recoup their investment faster while also increasing the value of the business so they can eventually sell it for a profit.
Of course, most buyers will examine any site they consider buying to see how they can improve it and make more money. But you can assist in the process by providing some ideas and suggested growth opportunities. Show potential buyers some options for taking the business to the next level.
Here are a few examples:
- Expand the product line: E-commerce businesses can increase revenue and profit by adding complimentary products and new variations of existing products. If you have an e-commerce business, do the legwork to find potential products that would make sense for expansion and provide those ideas to potential buyers.
- Add new revenue streams: Are there monetization methods you’re not using that would be good options for potential buyers? For example, if your site is only monetized with ads, you could find some relevant affiliate programs that the buyer could join.
- New platforms or channels: Would the business benefit from an expansion onto a new platform? For example, could the buyer grow the site by adding a YouTube channel? Are there social platforms that are popular with your target audience that you’re not using?
- Identify weak areas: Are there aspects of your business that you’re not doing well? If so, maybe a buyer could focus on these aspects of the business and see improvement. For example, search engine optimization (SEO), social media marketing, email marketing, or content creation.
By highlighting these growth opportunities, you can make your online business more attractive to potential buyers by showing how they can turn this into a great investment.
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3. Demonstrate Stability
Buyers are naturally drawn to online businesses that have demonstrated stability in terms of traffic and revenue. Stability is a key factor in building trust and confidence in your business, and it can help you attract more buyers and secure better offers.
George Moulos, Senior Broker at Ecommerce Brokers, said, “They [buyers] want to know when they buy the business that it isn’t going to fall apart. If they see month-on-month consistency and growth, diversified sales channels, and strong defensibility in the form of trademarks or even patents, they will be less stressed about the risk of post-acquisition failure.”
When buyers look to purchase an online business, they want to know that it’s reliable and has a track record of success and growth. They want to see that the business has been able to weather the ups and downs of the market and that it has a solid foundation for future growth.
One of the best ways to demonstrate stability is to have a history of consistent revenue and profit. Buyers want to see that your business has been able to generate steady income over time, even in the face of market fluctuations and other challenges.
While most online businesses have gone through some peaks and valleys, potential buyers usually want to see as much stability as possible. If the site has experienced big drops in traffic (for example, after Google search algorithm updates), potential buyers may be more concerned about similar things happening again.
Of course, you can’t change the past, but you can work on establishing and maintaining stability going forward. If you’re thinking about selling your site in the future, you can work to improve the stability between now and the time you sell it.
4. Establish a Consistent Revenue Stream
A consistent revenue stream is one of the most important things potential buyers look for in an online business. This means that your business has a reliable source of income that’s steady over time. Buyers want to see that your business is generating revenue regularly and that this revenue is at least somewhat predictable and stable.
Elena Buetler, Director of Marketing for Investors Club said “This consistent income stream provides them [buyers] with confidence in the business’s financial stability and growth potential.”
When a buyer sees a consistent revenue stream, they know what to expect as a baseline and can make more accurate projections about the business’s potential growth and profitability.
So, how can you ensure that your online business has a consistent revenue stream? Here are a few tips:
- Focus on the right revenue sources: Some revenue sources are more predictable than others. For example, buyers like ad revenue because it’s fairly predictable. Sure, ad revenue can change due to traffic gains or losses, plus RPMs sometimes increase or decrease. However, ad revenue is generally fairly stable and predictable. On the other hand, revenue from publishing sponsored content is much less predictable, so it’s not as attractive to buyers.
- Build customer loyalty: By building a base of loyal customers, you can have more consistent revenue and potentially attract more buyers. Loyal customers will continue to make purchases, even if there are fluctuations in traffic or other factors that may affect overall revenue.
- Monitor your metrics: Keep a close eye on your business metrics, such as your conversion rates, customer acquisition costs, and customer lifetime value. By tracking these metrics, you can identify areas where you can improve your revenue stream and adjust as needed.
5. Build Recurring Revenue
One of the most attractive features of an online business is recurring revenue. This means that the business has a steady stream of income that comes in regularly rather than relying on one-time sales. Recurring revenue is particularly attractive to buyers because it provides a stable foundation for the business and reduces the risk of fluctuating income.
Mark Woodbury, Partner at Raincatcher, singled out recurring revenue as the top detail that attracts buyers. He said, “The closer you can get to recurring or re-occurring revenue the better. It’s straightforward for a SaaS company but a bit more tricky for a content site. E-commerce businesses should focus on multiple orders, building a social following/ engaged email list so that they can increase orders from the same customer and CLTV.”
With a software as a service (SaaS) business, customers pay a monthly or annual fee for access to a software application. This creates a predictable income stream for the business and reduces the risk of revenue fluctuations. SaaS businesses are very attractive to buyers because they have a high growth potential and can scale quickly.
Another example of a business model that generates recurring revenue is a membership website. With a membership website, customers pay a monthly or annual fee for access to exclusive content or services. Although some members will cancel, future revenue is predictable if you know the church rate and the average customer lifetime value.
Businesses with recurring revenue, especially SaaS businesses, tend to sell for higher multiples than other types of online businesses. For example, a content-based website may sell for 3x annual profit, but a SaaS business may sell for 5x.
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6. Develop Systems
Having efficient systems in place is crucial to running a successful online business. When potential buyers consider purchasing your business, they want to know that it runs smoothly and can continue operating without a hitch, even when you’re no longer involved.
If your website or online business completely relies on you to function, there’s no effective system in place. In this case, potential buyers will worry about negative impacts when you step away. But if you have efficient systems that can be easily transferred to new ownership, buyers will feel more confident about the business’s future success.
It’s important to have a team in place before attempting to sell your online businesses. For smaller businesses, this can be as simple as having a virtual assistant to handle the day-to-day operations and a freelance writer to create new content. For larger businesses, it may involve a team of full-time employees. With a strong team in place, buyers will be confident that the business can run smoothly with or without you.
Standard operating procedures (SOPs) are also essential. SOPs are step-by-step instructions for how to complete tasks within your business. Having SOPs ensures that tasks are completed consistently and correctly, no matter who is doing them. Potential buyers love to see that SOPs exist because they ease the transition process.
7. Offer Minimal Risk
Buying a website or online business involves risk, but buyers want to limit and minimize their risk as much as possible. Jaryd Krause, CEO and Founder of Buying Online Businesses said, “The less risk a site has, the higher multiple it will sell for. And that’s what all sellers want: more money.”
As a seller, there are several ways you can reduce the risk for potential buyers:
- Build a strong brand: Strong, established brands are less likely to experience sudden dips in traffic or revenue. By building a strong brand, you can increase the perceived value of your business to potential buyers.
- Provide solid financial records: Accurate records make it easier for buyers to verify details during due diligence.
- Document all processes: Documenting all processes within your business, from content creation to customer service, can help potential buyers understand how the business operates and minimize risk. They will be able to see a clear roadmap for success.
- Offer training and support: Offer to provide training and support for a certain period after the sale. This gives buyers peace of mind knowing they can turn to you if they have any questions during the transition period.
Another way to decrease risk is to diversify, but this one is important enough that it’s worth mentioning on its own. Diversification is key to making your online business more attractive to buyers. Buyers want to see that your business is not solely reliant on one traffic source or stream of income.
By diversifying your traffic sources, you can mitigate the risk of losing all your traffic if one source dries up. For example, websites that get 90% of their traffic for organic search are more vulnerable to damage from a Google algorithm update. And sites that get most of their traffic from Pinterest are more likely to be seriously impacted if that traffic drops.
Regardless of what traffic sources you focus on, it’s essential to diversify and not rely solely on one source.
Diversification in revenue streams is also important. Online businesses that make all of their money from one source or monetization method are at greater risk. You can improve diversification by adding new products or services, expanding to different platforms or marketplaces, or tapping into multiple revenue streams like affiliate marketing and selling digital products.
By diversifying both your traffic sources and revenue streams, you can make your online business more attractive to potential buyers by reducing their risk. This will also help you build a stronger and more sustainable business model for the future.
9. Differentiate Your Site from Competitors
Potential buyers will want to know what advantages your website or business has over its competitors. This could be through unique products or services, a strong brand, or exclusive partnerships. When you can differentiate your site from others in the same niche, it increases its value and makes the business more attractive to buyers.
Think about what makes your business stand out. If you’re planning for a potential sale in the future, you may have time to work on improving in this area before trying to sell your business. If you’re trying to sell your business now, you’ll need to identify your existing advantages and clarify them for potential buyers.
As an online business owner, there are many ways you can make your website or business more attractive to potential buyers. This article covers nine specific things you can focus on. If you’re planning and preparing for a future exit, use this as a roadmap to get your business in top shape before putting it on the market.
If you’re ready to sell now, consider how to implement these strategies and position your business to increase the value and appeal to potential buyers. Remember, the more attractive your online business is, the easier it will be to sell, and you may even get a higher price for it.