E-commerce entrepreneurs are a hardy breed. They operate in an increasingly competitive sector where they constantly think about how to better manage their inventory, streamline the supply chain, improve product quality, and deliver great customer experiences. If you are an entrepreneur, then you know the drill!
To keep your business thriving, you make dozens of important decisions every day. However, if your business is experiencing slow growth or a lack of profitability, then one of the most critical decisions you will ever make is to sell your company. At this stage, instead of focusing on exhausting your limits by increasing e-commerce footprint, boosting sales, and growing revenues and profits, it’s better to sell your company right from the time of inception.
But what is the “right” time to successfully exit from the business?
This brief guide will show you how to assess your readiness to sell your e-commerce business smoothly and profitably by asking yourself four key questions.
Am I Unable to Manage My Business Effectively?
As your company grows, you will have to wear many different hats, from managing production and supply chains to optimizing inventory, ensuring order fulfillment, hiring resources, and also managing your company’s financial and compliance aspects. Even with a competent management team, you may struggle to optimally manage all these various aspects. This is when you should consider selling to a larger company or an e-commerce top brand aggregator like Ergode.
Brand aggregators are armed with AI tools, deep pockets, and human resources. They can help your brand achieve economies of scale and address its challenges. These solutions can also increase operational footprint, expand its customer base, increase sales, and profits. When you sell your brand to an aggregator, your brand’s value and competitiveness go up.
Am I Still Excited About the Business?
No business owner wants to feel as if they have lost the will to nurture the baby they birthed and caressed them up to a certain level of growth and competitiveness. And yet, this may be exactly what you could feel about your e-commerce business. This is because over time, many e-commerce founders can’t keep up with the constant daily grind of optimizing operations, managing third-party relationships, or putting out supply chain fires. If you are in this situation, exhaustion and apathy may have replaced your initial excitement and spark.
In this situation, selling the business may be the best way to keep it going. By selling, you can ensure that your loss of passion doesn’t affect the company’s prospects. And the sooner you recognize the signs of your exhaustion, the faster you can decide to sell the company while it’s still profitable (see below).
Is My Company’s Growth Plateauing?
When you started your business, you probably had grand plans to expand its presence, grow sales, and earn huge profits in the shortest possible time. You might have even achieved all these goals. But now, your firm’s growth might have stalled because of increasing competition, changing customer expectations, or an evolving regulatory landscape.
Even if your company’s USP remains unchanged – high-quality products, world-class customer service, competitive prices, etc. – you might have run out of ideas to address the above challenges in your business landscape. Or you may no longer want to take the responsibility to make the hard decisions required to push the company out of its growth plateau. One such decision is “should I look for new investments?” Another is “do I need to implement a mass redundancy plan?”
All these issues signify the need to sell your business.
Does My Company Have a Bright Future?
If you’re wondering that this question seems to be the opposite of the previous question – you’re right, it is! You should consider a sale in both situations: if your company’s growth shows a steady northbound pace or has stalled. If the firm is not growing and you don’t have the resources or capabilities to bring it out of its rut, you should think about selling it. But you should do the same if it is doing well and you expect it to remain profitable in the future.
When things are good – both for your company and the e-commerce industry – you are more likely to get a good price when you sell. This is because most buyers look to buy businesses that are already profitable and can potentially remain profitable in the future.
What is your brand’s value in terms of $? Can you justify it to a prospective buyer? Does it have a history of profitability? A solid balance sheet? A loyal customer base? A plan for future growth? If you can answer all these questions and prove that your e-commerce firm does have a bright future, you are likely to get a good buyer who will be willing to pay you what your firm is worth.
Most e-commerce business owners don’t want to contemplate selling the company unless the situation is dire and there’s no other option. But if you want your firm to remain profitable for the years to come, you should start thinking about an eventual exit very early in its lifetime. And knowing which questions to ask will help you assess your readiness to sell. More importantly, it will ensure that you sell at the right time to the right entity and for the right price.
Ergode is fast building a reputation as the “brand aggregator with the Midas touch.” Over the past decade, we have acquired numerous brands from categories like sports gear, home products, electronics, furniture, kitchenware, handcrafted decorations, and more. Upon acquiring the brand, Ergode transforms it from top to bottom. From optimizing operations to vendor management, from managing product portfolios to marketing, brand aggregators work on every aspect that can contribute to profit and eventually growth. If you’re a brand looking for scale-up and growth, connect with us.