In the bustling world of online entrepreneurship, the decision to sell a business can be both exhilarating and daunting. Today, we have the privilege of delving into the insights and experiences of three seasoned experts who have successfully navigated the intricacies of selling online businesses. Join us as we hear from Sophie Howard, Neil Bostick, and Ben Zogby, each bringing a unique perspective to the table.
Humans of Flippa Experts
Sophie Howard: With a track record of building, scaling, and selling six and seven-figure online businesses, Sophie Howard is a force to be reckoned with in the entrepreneurial sphere. As the founder of Aspiring Entrepreneurs, she not only shares her expertise but actively participates as a buyer on platforms like Flippa. Sophie emphasizes the importance of recognizing when it’s the right time to sell, especially if you’re not inclined towards the optimization phase of business growth. For her, the thrill lies in the creative aspect of entrepreneurship, and selling allows her to pass the baton to someone who can maximize the business’s potential.
Neil Bostick: As the CEO of FIH.com, Neil Bostick specializes in sell-side M&A services for online businesses, particularly in the SaaS, digital media, and e-commerce sectors. With a wealth of experience in negotiating win-win deals, Neil underscores the importance of packaging businesses effectively and determining appropriate valuations. His approach focuses on facilitating seamless transitions for business owners, ensuring a smooth journey from listing to sale.
Ben Zogby: Ben Zogby’s entrepreneurial journey began with a side hustle that evolved into HighStrike, an online educational stock trading business. After successfully selling the business for $1.8 million on Flippa, Ben founded ExitFrog to assist fellow entrepreneurs in achieving profitable exits. For Ben, the decision to sell was driven by a desire to refocus on the creative aspects of entrepreneurship while still contributing as a consultant to the business post-sale. He highlights the liberating aspect of selling, which not only provides financial rewards but also grants the freedom to pursue new ventures and projects.
Through their diverse experiences and expertise, Sophie, Neil, and Ben offer invaluable insights into the dynamics of selling online businesses. From knowing when it’s the right time to sell to navigating negotiations and transitioning post-sale, their collective wisdom serves as a guiding light for aspiring entrepreneurs and seasoned business owners alike.
Deciding When to Sell
In the dynamic world of entrepreneurship, knowing when to sell a business can be a pivotal decision with far-reaching implications. Ben Zogby, Sophie Howard, and Neil Bostick share their perspectives on this crucial aspect of the entrepreneurial journey, shedding light on the complexities involved and the factors that influence their decisions.
Ben reflects on the fluid nature of determining the right time to sell a business, likening it to trading stocks or investing in companies. He emphasizes the importance of assessing opportunity costs and evaluating whether one’s time is being utilized effectively and in alignment with personal preferences. For Ben, the tipping point occurs when the balance shifts towards feeling constrained or unsatisfied with the tasks at hand. While financial considerations are significant, operational dynamics and personal fulfillment play a pivotal role in his decision-making process.
Sophie recounts her experience selling her Amazon business, a milestone that marked one of the first significant Amazon sales at the time. Despite being relatively early in her entrepreneurial journey, Sophie recognized the value of her business after completing her first year’s tax returns. Motivated by personal circumstances, including having a young family and a mortgage, she swiftly acted upon receiving an offer and used the proceeds to pay off her mortgage entirely. Sophie’s journey underscores the importance of seizing opportunities when they arise and leveraging them to achieve personal financial goals.
Neil provides insights into the typical timeframe and process involved in selling businesses through brokerage services. While congratulating Sophie on her swift sale, Neil outlines a more traditional timeline, which typically spans several months. From initial valuation and contract negotiation to due diligence and finalizing the deal, the process involves meticulous attention to detail and thorough examination of the business’s operations and potential growth opportunities. Neil acknowledges the complexities that may arise during the process, from uncovering unforeseen challenges to addressing potential concerns raised by prospective buyers.
Valuing and Pricing Your Business
Ben reflects on his experience with HighStrike, an online educational stock trading business, which saw an initial valuation of $1.3 million before ultimately selling for $1.8 million. He attributes the success of the sale to market trends and strategic positioning, highlighting the importance of being in the right place at the right time. Ben underscores the significance of identifying emerging markets and anticipating future growth trajectories, which can significantly impact a business’s valuation. While financial metrics play a role, Ben emphasizes the value of being attuned to market dynamics and leveraging trends to drive valuation.
Neil offers insights into the psychology behind business valuation, emphasizing the role of perceived risk and potential returns in determining price. He distinguishes between businesses with one-time revenue streams, such as traditional e-commerce or digital media, and those with recurring revenue models, like SaaS businesses. Neil explains that while businesses with one-time revenue streams are typically valued based on profit calculations and multiples, SaaS businesses command higher valuations due to their scalability and predictable revenue streams. He highlights the importance of understanding buyer psychology and aligning valuation with perceived value and future growth potential.
Sophie shares her approach to finding the right buyer for her businesses, emphasizing the importance of screening potential buyers and prioritizing cash transactions. Drawing from her experience in the self-publishing industry, Sophie seeks buyers who can complement her business’s strengths and leverage synergies to drive growth. She emphasizes the value of strategic acquisitions and identifies high-net-worth individuals with related businesses as ideal buyers. Sophie’s strategy involves targeting buyers who can appreciate the strategic value of her business and are willing to pay a premium for the potential synergies and growth opportunities it offers.
Advice to Business Owners Looking to Sell: Maximise Business Value
As entrepreneurs navigate the journey of building and growing their businesses, the question of maximizing value and preparing for a potential sale looms large. Sophie Howard, Ben Zogby, and Neil Bostick offer invaluable advice to business owners seeking to enhance their business’s value and position it for a successful sale.
Sophie emphasizes the importance of productizing services and automating payments to create sticky, recurring revenue streams. She advises business owners to focus on introducing new features and outlining a clear growth plan to appeal to potential buyers. Sophie underscores the significance of selling at the right time, cautioning against waiting too long and missing out on optimal selling conditions.
Ben advocates for proactively structuring businesses as sellable assets, even if selling isn’t an immediate consideration. He highlights the value of systemizing processes and minimizing the incremental costs associated with acquiring new customers. Ben emphasizes the importance of recurring revenue and recommends adopting a subscription-based model to attract potential buyers and maximize scalability.
Neil echoes the sentiment of building a good business as the key to making it sellable. He emphasizes the distinction between lifestyle businesses and venture-backed startups, noting that both paths can lead to successful exits. Neil underscores the importance of increasing recurring revenue across various business models, from e-commerce to SaaS, as a fundamental strategy for enhancing value and attracting potential buyers.
In conclusion, the journey of selling an online business is multifaceted, requiring careful consideration, strategic planning, and a dash of entrepreneurial spirit. As echoed by Sophie, Neil, and Ben, it’s not just about closing a deal; it’s about embarking on a new chapter of growth, innovation, and possibility. So whether you’re contemplating an exit strategy or exploring new horizons, remember that the world of online entrepreneurship is filled with endless opportunities for those bold enough to seize them.
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