Picture of a laptop - post How To sell an internet business

How To Sell An Internet Business And Cash Out BIG

Picture of a laptop - post How To sell an internet business

When it comes to making an exit from your established, profitable business, there are quite a few different strategies you can use.

To help you narrow down those strategies and get a better idea how to move forward with the process, the strategies can be summed up in two different categories:

  • Finding an investor and selling the business by yourself.
  • Working with a third-party advisor to sell the business.

Finding qualified buyers that are ready to consider buying your business is closely related to marketing your business, and getting it to the point where it’s at today. You can apply those same marketing strategies to attract the right type of people that may currently be interested in acquiring the business either as an investment, or to merge into their own business. Throughout the years, I have spoken with a large number of both buyers, and sellers, and have dissected the strategies they’ve used to find out what’s most preferred. Some people have only ever bought and sold businesses in private deals, while others have only ever bought and sold while relying on third-party services and advisors. It’s actually pretty common that people will attempt to sell their business by themselves, only to reach out to a third-party or broker after their attempts have proven unsuccessful.

That’s why I’ve put together this guide to help you understand some of the questions that I get from both buyers and sellers whenever they’re looking to sell their internet business and cash out big.

How To Sell Your Business Yourself

This question comes up more often than most.  Look at any forum, blog, or podcast, and you’ll find someone asking how they can sell their business by themselves. It’s easy to understand why, too.  Entrepreneurs are self-starters.  They like to get things done by themselves so they can move onto the next task or project.  They want to be able to sell their business without outside assistance.

For those entrepreneurs, the three most common strategies for selling a business are:

  • Privately listing it for sale.
  • Selling the business to a competitor.
  • Selling the business to one of their employees.

How To Privately Sell Your Business

Most people think this is going to be the easiest route to take when they’re trying to sell a business.  

All you have to do is put together some information about your business, create a listing on a marketplace, and the investors will start pouring in, throwing offers to buy.  Right?

Unfortunately, this is rarely how the situation plays out.

If you do want to take on the sale of your business by yourself, a good place to list it publicly is on Flippa. Their marketplace is used by both brokers and private sellers.  It can be hard to stand out in a sea of other businesses that are currently being sold, though.

Sure, you can get all of the listing upgrades they offer, but these upgrades don’t always equal large numbers of inquiries and offers. I’ve ran the numbers to help you understand what the average listings look like on BizBuySellListings on their marketplace will typically receive 15 to 20 inquiries.  

Then, you have to figure in the amount of duplicate inquiries and the people that are kicking tires, just trying to get more information. There’s also a large number of people who aren’t qualified to buy. This quickly dwindles down the number of legitimate offers. To give you some perspective, most reputable brokers can receive anywhere from 100 to 200 inquiries on businesses they’re selling, and the inquiries are often far more qualified than what you’ll find on public marketplaces.

So why do people use Flippa, then?  For many people, especially those high volume sellers, having 15 to 20 inquiries on every listing quickly adds up, and they can hold onto the businesses longer while they’re waiting on a qualified buyer. If you regularly buy and sell businesses, public marketplaces can work out.  However, if you sell privately and want to get the business sold as quickly as possible, the marketplaces aren’t very useful. Public marketplaces also have fees associated with them, like success fees and listing fees.  Then, they do not provide much in the way of marketing, other than putting your listing on a page with a bunch of other listings.  You have to do all the work yourself.

Assuming you can’t find a buyer on a public marketplace, how else can you find a buyer, while selling the business as privately as possible? In short, if you don’t have a large network you can reach out to, you sell it through patience, energy, and a bit of frustration.

This is what leads us to a, sometimes, better solution for getting the business sold and still keeping the sale as private as possible.

How To Sell Your Business To A Competitor

To understand this strategy, take a look at some other businesses that have been sold.

Facebook bought Instagram for $1 billion.

While your business may not be worth $1 billion, or even be on Facebook’s radar, your own competitors may be interested in making an offer to acquire your business. You can reach out to them to let them know about your interest in selling, and may be able to work out a deal in some cases.

However, for the most part, whenever your competitors are going to be interested in buying your business, they will reach out to you. That means they’re not always going to be open to considering your offer when you contact them first.  However, if they contact you first, and you can negotiate the deal in your favor, it could be incredibly lucrative for you. For the most part, whenever you’re reaching out to a competitor, you are putting the ball in their court.  That means it can be harder for you to negotiate a higher asking price than you would get if they reach out to you and make the offer first.

Regardless how the offer is made, selling to your competitor is a great strategy because they already understand how profitable your industry can be, and will see the value in merging your business into theirs, or using your business to tackle a portion of the market they’re not already in. Be prepared, though, when you’re opening a deal with your competitors.  They can back out at any time, and you’re going to have to give them a substantial amount of information about your business that can make it easy for them to swallow your business without actually acquiring it.

Competitors are always going to be open to learning how you’re able to compete with them, and what they can do to improve their own business.  You’ll need to play your cards close to your chest if you choose to go this route.

How To Sell Your Business To An Employee

If you’re looking for someone to take over your business that knows it inside and out, understands your goals and dreams for the business, and can take it to the point you wanted to, you may not need to look any further than inside of your own ranks. 

People back to back - picture on samuel pavin.com

If you currently have employees or managers, they may be in a position to purchase the business and carry on your role long after you’ve gone. While this is a great strategy in some cases, there are some caveats you’ll need to understand before you start talking to your employees about buying the business from you. In most cases, you are going to have to finance the deal.  You’ll likely want to accept between 10% to 25% of the value of the business up front and then collect a portion of the profits over a set period of time, until they have finalized the deal. That means you’re going to need to make sure that the employees you’re considering are actually capable of running the business without driving it into the ground.  

If they can’t keep the business floating, you’ll likely have to recall the deal and end up in the same position you wanted to get out of when you first decided to sell. If you’re thinking about this as the route you want to take, you may want to step back and think about how important upfront cash really is to you. Instead of completely selling the business, you could consider promoting an employee into a senior position, and allowing them to continue running the business while you step away.  In this situation, you still own the business, and collect the lion’s share of the profits, but can focus your own energy on other parts of your life or a new project.

How To Get Paid After Selling Your Business

If you’ve found a buyer on your own, and you have agreed to terms that you both find attractive, you’ll want to get a Letter of Intent from them.  Then, you’ll need to begin the due diligence process, get your purchase agreement, and begin the escrow and transfer process. While this may seem simple, and fairly straightforward, it can actually be an incredibly frustrating process and one that takes a good deal of time. This is where having a broker on your side can save you a significant amount of time, and keep you from getting nearly as frustrated as you would by moving forward on your own.Most brokers understand the due diligence process and know how to quickly move through the negotiations to get the deal closed.

They understand what is, and what isn’t considered acceptable, and can approach the process with confidence that most first-time sellers simply won’t have.  They know how to ask the right questions to keep the deal moving forward, and keep your own best interests at the forefront of the conversation. Negotiating the contract will require you to speak to an attorney that understands internet businesses.  Most attorneys will attempt to work out a mutual deal between you and the buyer, while neglecting your own best interests at the same time. Brokers typically have attorneys that they’ll work with who know the deals inside and out, and can ensure that there aren’t any hidden clauses inside of the contract, or any terms that may not be favorable for you.

Closing the deal is actually one of the easiest steps.  Once your buyer has performed due diligence, and you have a contract in place that you both agree on, the rest of the process comes down to setting up escrow and beginning the transfer.

When A Broker Should Step In

9 times out of 10, working with a broker is always going to give you the best chances for finding a buyer, and getting offers that were higher than what you could receive on your own. Even though brokers do charge a fee based on the final sale price of the business, the price that they’re able to get for businesses typically far outweighs the fee that they charge. A good broker can build a win/win situation for both parties, and you get to remove yourself from the most frustrating parts of getting the business sold.

While there are definitely situations you can get the business sold by yourself, and are actually encouraged to if you think it’s possible, using a broker’s services comes with quite a few different benefits:

  • Brokers get you more inquiries, and offers.  A broker that has years’ worth of experience has a network that’s large, making it easy to get your business in front of people that are ready to buy.  They’ll invest in marketing your business for you.
  • You get to have a single point of contact.  You don’t have to deal with multiple different offers from people that probably aren’t qualified or actually ready to buy.
  • Last minute changes are minimized.  If the worst case does happen, and the buyer wants to implement multiple changes, your broker can quickly find a new buyer.
  • Brokers work through cash-only deals.  There’s no waiting around for deals to be financed, or for them to offer stocks in a public company in exchange for your business.
  • Brokers make deals happen faster.  There’s no waiting around for 12 months, or more, to get the deal done.  Most brokers can close a deal in less than 3 months.
  • You don’t have to worry about financing deals with your employees.
  • Brokers understand the due diligence and negotiation processes. This means you don’t have to develop the same knowledge, and can pass the process off to someone that knows what they’re doing.
  • Brokers ensure the deals are structured fairly and can be moved to completion, unlike attorneys that can kill deals where they stand.
  • Brokers offer the guidance and support you need.  Most brokers became brokers because they were entrepreneurs that wanted to sell off a business that they owned.  This is incredibly helpful for you, when you’re working through the process.
  • Brokers are incentivized to get your business sold.  Getting your business sold is their only job.  If you are completely committed to getting the business sold, they will be, too.

If you are thinking about selling your business, hopefully your eyes have been opened to a few different strategies you can use to start finding buyers that are ready to make offers. The same marketing strategies that you’ve used to grow your business can be flipped and applied to attracting buyers that may be interested in submitting offers.

About the author: Jock Purtle is a successful entrepreneur and website broker. He started working in the family business at the tender age of 9 and bought his first company at 19. Jock works with a variety of clients and channels his extensive experience when advising business owners on buying or selling their digital business, always looking to achieve maximum value.

P.S: This is a guest post, courtesy of Digital Exits. “Guest” is not “Sponsored” and while the content is theirs, I selected and approved it as it covers a topic offering added value to businesses. As such, I want to thank them for giving me the opportunity to feature this guest post here.

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Group of people looking at computer screen. Image for MyHub intranet post on samuel pavin blog

Easing Into Things – Intranet Creation Made As Painless As Possible

Two people looking at computer screen. Image for MyHub intranet post on samuel pavin blog

Any new business project is going to require thought, effort and time. And if you’re in the market for an intranet set-up – whether it’s a new tactic for you as a company, or you’re just looking for something new – you’ll quickly find yourself wondering just how much of each of those things an intranet is going to require.

There’s an incredible variety of options – not just specific individual platforms, but the configurable options within those platforms. Or do you start from scratch and build something that’s precisely what you need without the constraints of a pre-existing system? You want to keep things within budget, but you don’t want to find yourself setting up an intranet that suddenly can’t handle some of the functionality or features that you need it to be capable of.

Yes, there’s a lot to think about. Luckily, it’s our speciality. So here’s the run-down on keeping things straightforward for you and your business while maximising your intranet’s potential!

How Far To Push Customization?

Talk Through Things

A recurring theme in the development of an intranet is consultation. Make sure that the people who are going to be using your system get to have their say. Make a point to talk to people from all your company’s different departments to ensure that things aren’t swayed to a single more vocal group. You don’t want something that works perfectly for marketing staff and lets down financial staffers at every turn.

In a perfect world, your intranet will have all the functionality that you and your team need it to have in a way that stays streamlined. Nobody wants something that does everything but does so in an incredibly clunky and unrefined way – you’re setting yourself up for major problems down the track.

The Needs And The Nice-To-Haves

Establishing a list of what people need is the most crucial thing – but it’s also worthwhile to assess what are the useful extras that might not be wholly necessary, but that will make life a little bit easier. Getting people from each department to rank these things in order of priority or preference can give you a good sense of the collective desire for certain features – and you can compare these lists across the different departments.

There are all sorts of things to consider at this point, from search engine functions with an ability to rank articles and documents based on relevance and usefulness to online storage options allowing for real-time collaboration to mobile adaptability. There’s no one right answer when it comes to what functions you need, so do take the time to figure out what’s right for your organisation.

Looking Good

While functions are the really essential thing, sorting out the appearance of your intranet can be a pretty important decision. You want to make sure that people using the intranet really feel its connection to your organisation, rather than feeling like it’s yet another generic tech product that they need to learn to use.

Different Levels Of Engagement

Security Privileges

It stands to reason that no matter the size of an organisation, different users will have different levels of access – and different levels of security privilege. There needs to be some means of controlling different employees’ access to information, so that, for example, managerial staff can access employee data that regular workers can’t.

Ensuring that the intranet system that you put in place has this capability is essential. You don’t want people to be snooping around documents and data that they shouldn’t have access to. And you also need to have measures in place to protect security of the intranet at large, to avoid outside users hacking the platform and getting access to delicate data.

Administrative Power

Users with administrator privileges are the people with the power – making changes, determining who can see what and keeping tabs on what users are up to across the board. People who are in an administrative role (in terms of intranet users – not necessarily those with administrative roles in the non-digital side of the business) will need to be able to work quickly and effectively – since they’ll be using things all the time.

But on the flipside, regular workers will be using the platform every day too. Administrative staff may be busy fixing things up, but as a rule they will also be a little more tech savvy – or at least, they’ll tend to have more time to wrap their head around things. Everyday users need things to be easy and streamlined, regardless of whether or not they’re particularly switched on to all things technical. Keep it simple and intuitive.

Getting The Necessary Support

Internal IT On Board

Let’s be honest – in this day and age, most IT departments are overwrought. This is invariably the case whether you have a whole host of people working in this space, or you just have one person who fell into the de facto role of IT expert. Adding more to their plate can make things very tense, so getting their support is essential.

Being Platform Picky

Going for an intranet solution that is cloud-based is an easy and effective way to make strides towards an innovative new platform while maintaining your IT department’s peace of mind. But not all cloud-based providers are made equal. Sharepoint is an example of a platform that’s incredibly complex – for better or for worse. And in our experience, usually, for worse. In fact, it’s even been described as being “able to do anything, but nothing of them particularly well”. In order to shape it to do what it needs to do for your business, you’re going to need to pour a whole lot or resource (time, human and financial) into it – with no guarantee of smooth results.

WordPress is a platform that many people are familiar with for basic blogging or website needs – but as an intranet platform, it’s not without its own issues. You don’t want to go into a system without getting the reassurance that it’s going to do what you need it to without over-the-top levels of investment.

External Support To See You Through

Cloud-based software obviously doesn’t magically fix all things – and even the best, most carefully engineering pieces of software hit roadblocks. You’ll want to be confident in the technical support that comes with whatever company you go with. Do some sleuthing and make sure to ask all sorts of tricky questions if you’re talking to a sales rep. What’s their typical turnaround time for fixing issues that go beyond the scope of what your admin staff can fix? Do they offer round the clock support, or are you at the behest of whatever timezone their offices are based in? Don’t just go with one provider because they give you a convincing initial pitch. Make sure you know what you’re getting yourself into – so that you know that they can get you out of a tight spot if necessary!

Testing The Waters

Would you buy a new car without taking it for a test drive, or a pair of shoes without trying them on? An intranet system is going to affect a whole lot more than just your daily commute or the comfort of your feet.

Go for an intranet provider who can provide you a free demo and some instruction to kick things off so that you can make a fully informed decision. You don’t want to find yourself tied to a platform that didn’t end up doing what you thought it did, just because you were lured in by a shiny website and lavish promises. Keen to try MyHub? Get in touch!  

 

P.S: This is a guest post, courtesy of MyHub Intranet Solutions. “Guest” is not “Sponsored” and while the content is theirs, I selected and approved it as it covers a topic offering added value to businesses. As such, I want to thank them for giving me the opportunity to feature this guest post here.

MyHub Intranet Solutions is a leading cloud-based intranet software provider serving clients all over the world. We’re driven by the desire to be the best intranet provider in the world and are dedicated to providing market leading innovation, solutions, and service. For more information, please visit www.myhubintranet.com.

Mobile phone in the dark - on Samuel Pavin group blog

Checklist: How To Test a Mobile App

Consumers love mobile apps because of their convenience, which is why most businesses today are scrambling to make sure that they have their own. However, the expectations of convenience consumers have can be a double-edged sword in the sense that there is little to no margin for error. The vast majority of mobile app users will stop using an app if it fails to work properly more than once. That means businesses not only have to ensure that they have a mobile app, but that their apps will always deliver a flawless experience for users.

Testing a mobile app is the best way to help ensure that users won’t delete it out of frustration. What’s more, app developers and businesses need to be meticulous to ensure every nook and cranny of their apps is exposed. Users in the real world will likely not be gentle with a mobile app, and they won’t stop to think that maybe their expectations are a little unreasonable. The testing process must be complete so that flaws can be rooted out before users find them. The following guide provides you with a checklist of all the steps you need to take when testing your business’s mobile app.

 

P.S: This is a guest post, courtesy of XBOSoft. “Guest” is not “Sponsored” and while the content is theirs, I selected and approved it as it covers a topic offering added value to businesses. As such, I want to thank them for giving me the opportunity to feature this guest post here.

Author bio: Phillip Lew is Chief Executive Officer at XBOSoft, a software testing company. He oversees strategy, operations and business development through his expertise as a software engineer since founding the company in 2006. Lew holds a PMP certification and a Ph.D. in computer science and engineering from Beihang University.

Announcement Sam Pavin and ilab at UQ

#StartupAus “Breaking News”: An accelerator and an Announcement

Announcement Sam Pavin and ilab at UQ

Another announcement in the Australian startup world, another accelerator thrown into the spotlight and the name-dropping creating a buzz!

Not.

Actions are meant to be louder than words. At least this is what I believe. As such, this announcement will not be about covering another Techstars, another 500Startups or any other golden brand name.

Startups are built in the trenches or real life where the best, no-nonsense, people and programs operate. The trends in the ecosystem do follow that pattern; after a gold rush, chasing the next shiny thing on the shores of the Pacific, in the promised land of Silicon Valley, entrepreneurs are backtracking nowadays. New successful pools are emerging, proving that the valley does not have a monopoly on startups and success anymore.

In every country around the world, entrepreneurial ecosystems are being born, growing and delivering beyond expectations (at least those of people in the know; politicians and money-makers aside).

On being a grain of sand

A grain of sand is small, supposedly fairly useless, potentially painful when slipping in your shoes; a lot of things but remarkable.

A grain of sand is remarkable though from the moment it becomes part of a community. When grains come together, one by one, they create a beach. An evolving product, a creation of beauty and strength that sums up how successful startup communities are born.

But why the hell a grain of sand? And what is this “announcement” about in the end?

I pride myself in being one of these grains. Not a major, outstanding, figure in the startup(s) world(s). I have contributed to the building and growing of the French entrepreneurial ecosystem, the FrenchTech initiative, being an early presence when Lithuania got started on startups, advised and assisted in Scotland, Italy, Asia and Australia.

I love the startup world. I rise, fall, stumble, suffer, fail and succeed with startups.

And after a few years spent in Australia and around the young entrepreneurial ecosystem, it has become very obvious for me – and some great people around the community – that I could not remain just an observer. The time has come for me to join the team again and make a stronger contribution to the StartupAus world.

As such, I am delighted to officially announce that, as of today, Monday the 11th of September, I am joining the amazing team at ilab @ UQ (University of Queensland, in case you are wondering). Delighted is in fact a tame word that does not even cut it. This is an exciting prospect and I am over the moon at the thought of joining forces with these amazing humans that are Rebecca McIntosh and Bernie Woodcroft.

From prior times, exploring the Brisbane scene, I could witness a young, vibrant city and startup scene. Getting to know it and the people who are making it happen on a daily basis, I can safely say, startup life, in Brisbane, definitely is (growing to be) a beach.

The sense of community here is second to none and, on a larger scale, #StartupAus has the potential to grow and shine outside Australia’s borders. It is time to conquer the startup world!

Contributing to building this beach of a startup community will be one of my roles. And I very much look forward to the task, while casting an eye just on the initiatives to be seen at UQ. Ilab, IdeaHub and the Weekend of Startup, the growth of entrepreneurship and innovation in the education world, this pool of varied talents to be found on the university campus and the inextinguishable thirst to change the world witnessed in students.

I find myself in the middle of it all, at ilab, at UQ, in Brisbane and in Australia.

And I can not wait to start facing the hurdles, stumble along the way and ultimately, in a few years, be, once again, be able to tell the tale of the grain of sand and the sandy (startup) beach of Australia.