There are many reasons why an entrepreneur ultimately decides to exit a business. Some of the best incentives? Moving on to new opportunities; recapitalization; and, perhaps best of all, an especially lucrative buyout offer.
Related: 10 Questions to Ask Before Selling Your Business
No matter what the reason, if you're the one moving on, take the necessary steps to extract the maximum value possible from your sale. With all the blood, sweat and tears you’ve put into building your business, don’t let yourself be shortchanged on the way out.
Here are nine actionable steps you can take to better prepare your business to be sold to a discerning buyer, along with suggested resources to help you accomplish them.
That’s part of the reality of being a salesperson, or even an entrepreneur focused on selling. What you’re selling isn’t going to be perfect for everyone—regardless of what you may think. Sure, it’ll take a degree of product or market education in order to close the majority of your prospects, but all the education or sales strategies. In 2010, teenagers increasingly are going into business for themselves as a hedge against a difficult job market. 'The Wall Street Journal' quotes Jack Kosakowski, president of Junior Achievement, U.S., as saying, 'for many kids, starting a business may be the only option if they want to make some. 13 MINI SERIES- Checklist 13: SALES FUNNEL CHECKLIST: build your business online This is the last episode in the mini series called “100 things every business must do to succeed online”. This is the 13th checklist, all about sales funnel basics. Keep in mind, whether you choose selling a niche market or selling based on consumer demand, you’ll need to invest in inventory. It’s harder to turn profits if you’re only selling a few things at a time, so plan to stock up! If you’re just getting started, it’s time to think about your online strategy. The Checklist companion lists Australian, state and territory government agencies that are referenced in the Starting your business checklist. It’s a quick reference to help you find who to contact.
1. Detailed financials
Having strong accounting principles in place, from the beginning, will help put you in a position to succeed.
Industry stalwart Quickbooks provides you with all the tools you need to track your financials and generate detailed reports. It makes the process easy, too -- Quickbooks automatically syncs with most bank accounts-- drastically cutting down on data entry.
The Entrepreneurs Checklist To Selling Online Courses
The process isn't effortless, though. You still need to input accurate data in a timely manner. As with any other software: “garbage in, garbage out.”
2. Verified traffic
Google Analytics is an indispensable tool for monitoring and verifying your website traffic. It's the first step to knowing who your prospects are, what they want, where they're coming from and how far they've gotten through your conversion funnel. If you have a website and haven't set up Google Analytics, stop whatever else you're working on and do it now.
Being able to show verified traffic to a buyer, over as long a time frame as possible, will greatly enhance the salability of your business.
3. Stand-alone branding
Building a brand strongly tethered to a founder’s persona might feel right when you first start. But if that brand becomes successful, it’s preferable that the messaging not be too closely tied to its founder. That can actually become an obstacle when it’s time to sell, particularly if the founder is to have no ongoing role in the business after the exit.
Related: Time to Sell Your Business? You'll Need Metrics.
Consider building a stand-alone brand right from the get-go. Your brand should be aligned with your values and your company’s core mission. A smart branding strategy can help you achieve those aims without the founder being the “face” of the business.
Unfortunately, there’s no quick fix for building a brand. But it’s more important than ever.
Branding guru David Lemley’s Retail Voodoo site, while not specifically geared toward online businesses, is a great resource for learning more about the importance of branding strategy and its potential ROI.
4. Keyword analysis
Knowing what keywords your prospects are searching for can help you, and any potential buyer, assess whether your site is built on a solid search engine optimization (SEO) foundation.
To find out what keywords your site should be targeting, use tools like SEMrush to uncover which organic and paid keywords drive traffic to your competitors. The Google Keyword Tool enables you to get the most accurate search volume and PPC (price per click) data for those keywords.
A site that ranks high in search engine result page (SERP) listings on relevant keywords will earn a higher valuation. Prospective buyers can be assured that their acquisition target is ahead of the game for organic traffic and has a clear marketing strategy for both free and paid clicks.
5. Content marketing
ROI in content marketing has a reputation for being slippery to measure. Despite this, content is the foundation of SEO. Having a proven content marketing strategy, with positive search traffic results to back it up, can measurably increase the value of your business.
Content marketing isn’t just about your blog. It applies to many channels: social media, product descriptions, guest posts, Youtube videos, etc. Anything content-related that drives traffic to your site and promotes lead conversion fits under this umbrella.
Once upon a time, all you needed for a solid SEO strategy was to stuff your site with keywords. Google is much too smart for that now, as are your customers. There’s simply no substitute for quality content. Deploy it, using a coherent strategy for improving your search rankings. Your bottom line, and your valuation, will grow.
6. Outsourcing
Outsourcing is an important element in fostering limited owner involvement -- a key factor buyers look for in any online business acquisition. While building the right remote team takes work, having it in place, and having your standard operating procedures (SOPs) well documented, will greatly improve the salability of your business.
While there are many options for outsourcing, often industry-specific ones, two of the most reputable companies remain Upwork and Toptal.
7. Legal
Make sure you have clear and verifiable rights to all of your intellectual property. This includes any trademarks, copyrights or patents your business might hold. These can be an invaluable asset to your company, and any serious buyer will want to ensure that these are owned (and thus able to be sold) free and clear.
Additionally, make sure to get non-disclosure-agreements (NDA) in place with anyone you enter into negotiations with. Do this before you start talking seriously -- and certainly before you reveal any sensitive information, financial or otherwise.
An option here is offshoring, or outsourcing of legal assistance, through legal process outsourcing (LPO). For relatively simple tasks, such as forming an LLC or S-Corp or running a trademark search, LegalZoom may be another viable option.
When it comes to something as important as protecting your IP, however, always employ our own counsel.
8. Know your value.
After you’ve taken all of the steps above, you or a qualified professional should be in a very good position to assess the true value of your business. There are industry standard-valuation methods for this: Typically the seller discretionary earnings (SDE) model is used to value a business worth under $5 million, while 'earnings before interest, taxes, depreciation and amortization' (EBITDA) is used for companies valued over that amount.
9. Know your buyer.
One of the many reasons to consider approaching an M&A advisor to help with the sale of your business is that he or she will have already done the due diligence required to vet qualified buyers. These professionals will entertain offers only from candidates who have met stringent criteria. If you elect to go it alone, all of this responsibility falls on you, the seller.
Related: Expert Advice to Help You Prepare to Sell Your Business
Final thoughts
Building a successful business, and growing it to the point where it might attract attention from a buyer, is no small feat. Neither is coming to the decision that it’s time to move on. You may be ready to take your foot off the gas on this particular vehicle, but don’t stop before crossing the finish line. Follow the steps outlined above to ensure you get the maximum possible return when selling your online business.
If you are starting a business and need direction, this checklist is a valuable resource. Go here to register for workshops and schedule a consulting appointment, or call (813) 204-YBOR (9267), and select Option #4. You can also download a printable version of the Small Business Start-Up Guide.
Attend one of the introductory workshops for starting your business.
These workshops are offered throughout the year at various locations in the community, as well as at the Entrepreneur Collaborative Center. The workshops will include important information and resource materials to help start your business.
Prepare a pre-business plan summary
This is a general overview of your business idea(s). Include business location, number of employees, and to whom your business will market. On a separate sheet of paper, summarize your idea in 50 words or less. Be sure to estimate your start-up costs, monthly expenses, and cash flow.
Determine business organization type
Sole Proprietor
Partnership*
Limited Liability Company*
Corporation*
*If your business will be a Partnership, Limited Liability Company, or a Corporation, you must register under the Florida Business Corporation Act. Contact the Florida Division of Corporations, Bureau of Corporate Records, Tallahassee, (850) 245-6000, www.sunbiz.org Franchise, for information visit www.sba.gov
Business name
Fictitious name – If a Sole Proprietorship uses any name other than the owner's legal name, or if a Corporation uses a name other than its legal corporate name, a fictitious name (also referred to as a D/B/A) must be registered with the State. Register this name before pursuing any license or permit. Contact the Florida Division of Corporations, Tallahassee, (850) 245-6000, and select option #5, sunbiz.org
Licenses
Certain business types may require specific licenses in order to conduct business. Review the list below and contact the agencies to see if any additional licenses are needed for your business.
Contractor license
In order to be licensed in Hillsborough County, contractors are required to file a complete application, obtain approval of that application from the Licensing Board, pay appropriate fees, and pass the state Experior Assessments Examination for their licensing category. If you plan to work outside Hillsborough County, you may need to take a state examination.
- Hillsborough County – (813) 272-5600, select 4 - Plans and Permit Information (PGM Store)
- State of Florida – (850) 487-1395, MyFloridaLicense.com
Professional licenses
Many businesses need to be licensed through the State. Call the number listed below or visit the website to verify if your type of business would require a license through the State. Examples of businesses that need professional licenses are: hair and nail salons, accountants, all types of construction, and more. Contact the Department of Business and Professional Regulation, (850) 487-1395, MyFlorida.com/DBPR
Department of Hotel & Restaurant
Your business may require a license or permit through this State department. The local office is at 3725 W. Grace Street, Suite 520, Tampa. (850) 487-1395 MyFloridaLicense.com/DBPR
Department of Agriculture & Consumer Services
Your business may require a license or permit through this State department.
Fresh from Florida - Consumer Services - (800) 435-7352
Zoning and permitting
All businesses, including those that are home-based and store-front, should research the necessary zoning and permitting laws of the County and City where their business will be located.
Hillsborough County
- Zoning and Permitting, (813) 272-5600
If necessary, contact the appropriate city:
City of Tampa
- Zoning, (813) 274-3100 Option 1
- Permitting, (813) 274-3100
City of Temple Terrace
- (813) 506-6420
City of Plant City
- Planning and Zoning, (813) 659-4258
Business tax receipt
A Business Tax Receipt is required for anyone conducting business in Hillsborough County. Also, if your business will be located within the city limits of Tampa, Plant City, or Temple Terrace, in addition to obtaining a Hillsborough County Business Tax Receipt, you may need to obtain a City Business Tax Receipt. Contact the city where your business will be located to determine the city requirements.
Business Tax - Hillsborough County
(813) 635-5200
HillsTax.org
Business tax - Cities
- City of Tampa, (813) 274-8751, TampaGov.net
- City of Temple Terrace, (813) 506-6420, TempleTerrace.com
- City of Plant City, (813) 659-4215, PlantCityGov.com
Taxes
The type of taxes and the rate at which you pay taxes depends on the nature of the business, the legal organization and number of employees, if any.
Federal taxes
- Internal Revenue Service – The local office is at 3848 W. Columbus Drive, Tampa, (813) 348-1831. Many questions can be resolved online without visiting a Taxpayer Assistance Center (TAC), however, if you believe your tax issue can only be handled face-to-face, please visit the Contact My Local Office in Florida page to find the closest TAC center to you so that you can schedule an appointment.
- Apply for an Employer Identification Number (EIN) Online. Business hours are 7 AM - 10 PM.
- Important: The IRS cannot process your application online if the responsible party is an entity with an EIN previously obtained through the Internet. Please use one of their other methods to apply. See How to Apply for an EIN.
- IRS Tax Calendar for Businesses and Self-Employed. View due dates and actions for each month. You can see all events or filter them by monthly depositor, semi-monthly depositor, excise, or general event types.
- Knowing the basics about taxes can help you run your business better. See the Small Business and Self-Employed Tax Center on IRS.gov for more information.
- You can select and download multiple small business and self-employed forms and publications or you can call (800) 829-3676 to order forms and publications through the mail.
State taxes
- Sales Tax – If your business is required to collect tax, contact the Department of Revenue, (850) 488-6800, option 4 - DOR.MyFlorida.com
- Unemployment Insurance Tax – (800) 482-8293, option 3 - DOR.MyFlorida.com
County taxes
- Real Estate Tax, (813) 635-5200, HillsTax.org
- Tangible Tax – A tax is levied on tangible (physical) business assets, (813) 272-6988, HCPAFl.org
Insurance and bonding
In order to obtain the best insurance protection for you and your business, consider the following:
Your homeowner’s or automobile insurance company may offer business insurance; if not, ask for a referral to another company before cold calling.
Florida Department of Financial Services (800) 342-2762, MyFloridaCFO.com Key benefits of email marketing.
Liability, Property, and Automobile Insurance
Business Interruption Insurance
Home Office - If your business is being operated from your home, contact your homeowner’s insurance provider to update your policy to include coverage for office equipment and/or inventory, etc. A standard homeowner’s policy will not cover business operations or assets.
Employee Insurance - If you hire employees, you may be required to provide unemployment insurance.
Worker’s Compensation, (850) 413-1609, or (800) 342-1741, MyFloridaCFO.com/Division/wc/
Surety Bonds, SBA.gov
Financing
Most banks will not make loans to a start-up business. The following are possible financing sources or areas to research for different options:
Personal Savings, 2nd Mortgage on Home, Friends, Relatives, and Credit Cards
U.S. Small Business Administration (SBA) Loans – Check with your bank for a U.S. SBA loan officer, SBA.gov
Attend our financing workshop held throughout the County to gain valuable knowledge about the lending process and how to apply. Register for workshops and other resources.
To establish the credit history for your business or to conduct business with the federal government, you will need to obtain a Dun & Bradstreet Data Universal Numbering System (D-U-N-S) Number. Obtaining a D-U-N-S Number is easy and free. Visit DNB.com or call (844) 281-0961
Develop your idea
Test your idea with potential customers and others who will offer constructive feedback, e.g., friends, relatives, bankers, and suppliers. Be prepared to make changes based on their responses.
Protect your idea
If your product or idea needs a patent, copyright, or trademark, contact the following numbers and/or websites to obtain more specific information:
Patent Office – Washington D.C., 1-800-786-9199, USPTO.gov
Copyright - U.S. Library of Congress, (202) 707-5959, Copyright.gov
Trademark – Federal, 1-800-786-9199, USPTO.gov
Trademark – State, (850) 245-6051, Sunbiz.org
Prepare your business plan
Everyone needs a written business plan. The details of your business plan depend on the type of business you will have. Even a home-based, start-up business with you as the only employee needs a business plan. This business plan will be your road map to success. To obtain a loan or grant, a business plan is required.
Attend the Business Plan Workshop or a Preparing Your Business Plan Workshop
The Entrepreneurs Checklist To Selling online, free
Register for a workshop here or call (813) 204-9267.
Make an appointment with a Business Counselor to review your business plan
The Entrepreneurs Checklist To Selling Online Websites
Starting a small business will prompt many questions and decisions. If you have any questions, or would like to have your business plan reviewed, visit our website.
The Entrepreneurs Checklist To Selling Online Business
You can register for free, individual, confidential counseling on the site, or call (813) 204-9267 to schedule an appointment.