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Preparing your business for a sale



Selling an ecommerce private label brand can be a great way to cash in on your hard work and investment. However, it's important to be prepared before you put your business on the market. Here are a few things that you can do to improve the chances of a successful process:

  1. Have proper financial statements. Potential buyers will want to see that your business is profitable and has healthy margins. Make sure you have up-to-date financial statements that show your revenues and expenses. Monthly statements for the past 24 months is a good standard.

  2. Have fully registered trademarks. If you have any trademarks associated with your brand, make sure they are fully registered with the appropriate government agency. This will protect your brand and make it more attractive to potential buyers.

  3. Have bank statements. Potential buyers will want to see that you have a good track record of managing your finances. Provide them with bank statements that show your income and expenses over the past couple of years.

  4. Have invoices from manufacturers. Provide potential buyers with invoices from your manufacturers. This is important for them to validate your cost of goods sold.

  5. Have other business records. Potential buyers may also want to see other business records, such as contracts, marketing materials, and customer lists. Be prepared to provide them with any information they request.

Once you have all of the necessary documents and records, you can start marketing your business to potential buyers. There are a number of ways to do this, such as hiring a business broker or listing your business on online marketplaces. If you hire a broker make sure to set expectations up front about the process. They are helpful in preparing the information described above, as well as in finding buyers and negotiating with them. However their level of involvement might vary, which is why we suggest discussing upfront how and when they will participate throughout the sale process.

You can also go directly to potential buyers without hiring a broker. The best approach depends on your goals and experience. For instance if you have experience negotiating transaction documents and also have a base level understanding of the whole process, it might be better for you to do this yourself. If you don’t have experience or time, hiring a broker might make more sense.

Here are some additional suggestions for selling your ecommerce private label brand:

  • Set a realistic price. When you're setting a price for your business it's important to be realistic. Consider the value of your assets, your sales and profit history, and current market conditions.

  • Be prepared to negotiate. Once you've found a buyer who is interested in your business, be prepared to negotiate price and other terms. Keep in mind that price might not be the most important variable to the buyer. You should also think broadly about deal structure and who your counterpart is. A trustworthy counterpart offering reasonable terms might be more attractive than a less reliable buyer offering a higher price.

  • Get everything in writing. Once you've agreed on deal terms with the buyer, make sure to get everything in writing. This includes the purchase price, the terms of the sale, and the obligations of both parties. A brief letter of intent is useful, even if it’s non binding.

  • Hire an attorney. It's a good idea to hire an attorney to help you with the sale of your business. An attorney can review the contracts and make sure that you're protected. It doesn’t need to be a big and expensive engagement, a few hours of high quality legal review can give you significant value.

Selling a business can get emotional. Preparation and having the right set of expectations can help a lot. Patience and flexibility are also big assets that you can bring to the table to make this a successful experience for everyone involved.

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