One of the biggest emerging markets in the current digital landscape is the buying and selling of products on Amazon. Entrepreneurs have identified an opening in the market to create and develop tangible ideas, get the project off the ground, and scale them into successful and profitable businesses.
They then sell them for a profit to investors or interested buyers and possibly move on to their next concept. But we wondered, what is the best way to actually sell these businesses?
What are the steps you can take to get the project established and sold to the highest bidder if you have a great concept that you want to develop that you know will grow into a huge success? Well, look no further, we have put together a basic guideline for getting your great concept on the marketplace and selling it to the right buyer. Let’s get stuck straight in.
Knowing what you have to offer should be at the top of your mind throughout the entire process of creating and growing a business. But this will need to become even more prominent when you do decide to sell yours to eager buyers. It is important to know that your company needs to be at least over a year old before you sell.
Before considering offers to sell Amazon business assets, the general rule is that the business should have been in operation for at least 24 months. And you might notice that you will have a few during that period. It is important, however, to ensure that you don’t jump at the first offer. The older your business is, the more valuable it becomes.
The next thing to consider when determining the worth of your business is its current financial situation. If you are seriously considering selling, and have been offered an amount, it could be worth your while getting an accountant involved for an accurate figure.
To determine the value you will need to calculate the Seller’s Discretionary Earnings, multiply that by 3.5 and add the inventory on hand for a basic overall value. From there, you can add and subtract basic day-to-day costs, but this should give you an estimate of the value of the company.
You don’t only want to show potential investors your historical earnings, if you really want to bolster your earnings from the sale, map out the potential of the business.
Consider what you have put in place to scale the business going forward. What lead generation tools have you integrated to keep building and expanding your database? For example, you can download LinkedIn automation software that streamlines funnel automation on one of the most powerful social media platforms, LinkedIn. It’s a great example of the vast variety of automated tools that can help you generate leads from various sources without too much work from your side.
When compiling your financials and business proposal, it will be worth your while to identify mid to long-term goals of the company and tangible solutions for achieving those goals. How will a gradual increase in marketing spend expand your audience and heighten your conversion rates? Where should increased spending be directed for maximum ROI? These calculations and estimates will assist the buyer with their due diligence and calculate how much they will need to spend when taking control of the company.
Selling your first Amazon business will be both exciting and overwhelming, but don’t let an offer cloud your judgment. There will be a number of fees that you will need to pay when selling your business, so you will have to make sure that your take-home pay is enough to cover these while still leaving you with a generous profit.
You will need to cover the following:
- Legal Fees. During the final stages of the transaction, an attorney is required. Do not spend time and money on one during the due diligence phase; instead, wait until you are confident that the deal will close. An attorney can assist you in drafting an Asset Purchase Agreement and ensuring that the transaction is met and completed.
- Taxes. Many people forget that taxes are a vital expense that you need to include in your calculations when you sell your Amazon business. Taxes differ from one country to the next and from one state to the next. But if you are looking for an approximate figure, you can expect to pay anywhere from 5% to 20% of the total sum.
Selling your Amazon business requires a lot of due diligence and careful calculation from both you and the buyer’s side. Spend time working out all costs involved, and don’t get discouraged if the first sale falls through. There will always be buyers looking out for a successful Amazon business.