When is the Best Time to Sell Your Amazon Online Business?
You’ve built a successful Amazon online business and grown it to a point where it’s generating consistent, healthy revenue. And now, you want to move to the next chapter of your entrepreneurial journey and take on a new challenge. So you are probably asking yourself – “When is the best time to sell my Amazon online business?”
Ideally, selling your FBA business in the expansion phase would be best. That’s when the valuation multiples are highest, and you are likely to get top dollar for all the efforts you have put in so far to build your Amazon business. And investors usually look for opportunities that can give them higher ROI on their initial investment; acquiring an Amazon business ready to break through to the next level can be a tremendous acquisition for them.
Unfortunately, we don’t live in an ideal world. Things rarely go according to plans, and sometimes there could be a situation where you might be forced into exiting before your FBA business ever reaches the expansion stage. In such cases, getting a fair valuation is even more crucial before making the final decision.
When Might It Be a Good Idea to Sell Your Amazon Business?
When selling an Amazon business, most people directly discuss the valuation, business lifecycle, and all sorts of technicalities. But there’s a lot more to it.
It’s important to understand that selling a business could be a big personal decision, so you must carefully evaluate how it will affect your life moving forward.
Here are some reasons why selling your Amazon business now might be a good idea:
- You’ve discovered a lucrative investment opportunity that requires a significant outlay of your capital or time. It’s not possible to pursue it while managing your FBA business.
- There has been a change in your financial circumstances. Maybe you are getting married and moving to a new country, or some personal issue developments need a sizeable chunk of money.
- You may want to spend more time with your loved ones and work less.
- You may be bored running an Amazon business that doesn’t interest you anymore.
- You want to take time off to travel or reconnect with your greatest passions.
- You believe your Amazon business has outgrown you and needs someone who can run and manage it better.
So, you feel the timing is right; but is your business ready for sale?
How to Make Sure Your Amazon Business Is Ready for Sale
Amazon stores attract hundreds of millions of dollars in investments every month, and it’s a space where savvy individuals and veteran aggregators shop for their subsequent acquisitions. They aren’t going to part with their hard-earned money just like that. You’ll have to convince them that your business is ready for sale.
Here is what most FBA investors look for when buying an Amazon business:
Upward-trending Growth
Your business must be on a promising growth trajectory. No investor wants to invest in a stagnant asset, or worse, one that’s dipping hard. After all, they don’t just want to get their money back but also to multiply their investment.
However, it’s essential to differentiate between false growth and actual growth.
Consistent sales, stable monthly profits, an increase in organic orders, rising product demand across the niche, and customers leaving regular positive reviews are some signs that can help you decide if your business is on the right path.
If you find your Amazon store lacking in these areas, stop right there and focus on how you can improve things. You might have to delay the sale of your business by a few months, but it’s better than selling it for cheap, especially when you can exit on a high multiple with some minor tweaks and adjustments.
Established SOPs
Every business needs established SOPs. This is how you achieve standardization and uniformity in your operations. For a new owner, well-defined SOPs help with the smooth takeover of the business.
You must make sure you document all of your Amazon store business processes. For example, if you inspect your FBA shipments before loading them, check that all the steps are listed with clear instructions for carrying them out. Likewise, if you outsource some of your tasks to a team of VAs, ensure you document those with clearly defined responsibilities.
Registered Trademark, Brand, and Patents
Brand, patent, and trademark registries are crucial when marketing your Amazon business for sale. Every investor wants their investment to be safe. If you have a brand, trademark, or product patent not registered, there is a risk that someone may steal your business’s identity or product idea and leave the new owner vulnerable.
A registered brand gives your business a solid foundation to scale. Customers like to shop for products from their favorite brands. They refer them to friends and family, who spread the word in their social circle. If your investor decides to add a new product in the future or sell globally, having a solid brand will help them achieve their goals quickly.
How Long Does It Take To Sell an Amazon Business?
Sometimes selling an Amazon business can take over 6 months, on average. However, if you’re working with a broker, you can expect to close the sale even faster. In addition to expediting the sale process, professional brokers can also help you get the highest quote, and there are greater chances of finding the perfect buyer faster.
Though keep in mind that there’s no definitive timeline marker that is true for everyone when it comes to determining the time it takes to sell an Amazon business. Depending on the complexities involved in the deal, some businesses may take longer to sell.
Other factors, like the size of the business, may also help you sell your Amazon store faster. Typically, smaller Amazon deals close much quicker than bigger deals. The due diligence process is faster, and the deal terms are more straightforward than with more significant acquisitions.
How Can I Sell My Amazon Business Fast?
Before you even get the paperwork ready to sell your Amazon business, you must prepare yourself emotionally. This is arguably the single biggest thing that can delay the sale. There are countless examples where FBA owners had everything ready to sell their business, only to pull out at the last moment because they didn’t feel right parting ways with it.
Of course, selling your Amazon business isn’t a decision you make on a whim. So, take your time and ensure you’re confident about your actions.
Once you’re ready to sell your Amazon business, focus on making your business more appealing to potential buyers. This will help you get a higher valuation and speed up the sale process.
Here are some tips for selling your Amazon business fast:
Improve Your Profit Margins
Investors are interested in Amazon businesses that can provide them the highest return in the shortest time. Improving profit margins will make your business more worthwhile and help expedite the selling process. Identify the expenses you can cut down and go all in on strategies that can help boost your sales and increase your bottom line. Optimizing your product listing, supercharging your ad campaigns, and negotiating better terms with suppliers and freight forwarders are some ways to improve your profit margins.
Consider Automation
Automation works wonders for Amazon store owners, allowing them to focus on more strategic initiatives rather than day-to-day activities. Automate repetitive tasks so that they require less intervention on your part. Using third-party seller tools and hiring VAs are effective strategies in this regard.
Organize Your Documentation
Organized documentation is a great way to attract buyers, add value to your business, and walk away with fair compensation. Make sure to secure intellectual property, trademarks, and licenses. Keep the financial statements clean. Maintain a proper record of supplier agreements. All this will help streamline the due diligence process and wrap up the sale quicker.
Are Some Months More Favorable for Selling an Amazon Business?
Investors usually look for new investment opportunities at the start of the year, so listing your Amazon business in the first few months of the calendar year may be better. Due to the higher demand in these months, you’re more likely to get better offers and close the deal faster.
Furthermore, the start of the year allows buyers to compare and analyze your store’s performance more holistically, helping them to make better-informed decisions.
Frequently Asked Questions About Selling Your Fba Store
For What Multiples Do Amazon Businesses Sell?
Amazon businesses can sell for multiples of 20x-50x of the monthly net profit or 1.5x-5x of the annual profits. Understanding how multiples work is crucial here. They vary a lot, and there is always a big to miscalculate the proper value of your business, and you may end up selling at a lower value. It is easy to miss one of the many factors influencing the multiples – including financials, business models, store traffic, supplier terms, brand loyalty, marketing trends, sustainability, business transferability, potential growth, and more.
Where Can I Sell My Amazon Business?
There are plenty of ways to go about selling your Amazon business:
- DIY approach: The first approach is to sell your business independently, i.e., without hiring a broker or intermediary to handle the selling process. You must prepare to send cold emails and phones to potentially thousands of buyers who might be interested in your business. Taking the solo route can take several months to close the deal. It also carries the risk of fraud and getting a low return on your investment.
- Online Marketplaces: Using online marketplaces to sell your Amazon business may help you sell it relatively faster when compared to a DIY approach. It also offers greater financial safety. However, your business will compete against hundreds and thousands of other listings, so you might need to settle for a competitive price. Typically, it may take you between 5-8 months on average to close the deal on an online marketplace.
- Amazon business broker: Selling your Amazon business through a reputable broker is perhaps the fastest way to sell your Amazon business and ensure you get the maximum value. Amazon brokers have extensive experience negotiating deals and selling FBA stores. They will guide you through the complete selling process, including marketing your business, negotiating a deal, preparing contracts, and overseeing the handover.
Are There Any Taxes Paid When Selling an FBA Business?
Like any regular business, selling your Amazon FBA business will result in tax liability. Once a deal is closed, you must file a final income tax return. It is best to consult with your local tax authorities and broker for the details, as they may vary significantly.
Conclusion
Even though selling your Amazon business may seem overwhelming, it’s time and effort well-spent. If you take a proactive approach toward planning and doing your homework correctly, you will close the sale quickly and smoothly and get a fair price.
