Most of us do not start up a website with the thought of selling it one day - we usually start up a website with the thought of making that site popular, useful, and/or profitable. But inevitably, for anyone who has been in the online business world for any significant period of time, the thought enters our heads about whether or not we should sell our business.
There are a lot of articles on the Internet that concern how much a web business is worth. It is a topic that we may address some day in the future, but for the purposes of this article, I want to focus on factors that can help increase the value of your web based business.
One important note before we start: these tips are geared towards businesses whose value would be more than a few thousand dollars. This is not geared toward the "Flippa" crowd, but rather to more established online businesses.
With that, below are a few tips on increasing the value of your website.
Financial Records
The lifeblood of any online business acquisition is a business's financials. If any experienced buyer approaches you, or if you solicit your site for sale to an experienced buyer, one of the very first things that a buyer will request are financial statements.
The reason for this is simple: buyers want to know how much they can reasonably invest in acquiring your business. Whether you are selling Youtube.com or MaAndPopShop.com, a buyer is constantly gauging the relative risk of their investment. Financial statements are simply the easiest way to get a starting point as to where a business can be financially.
Many people will read the above statements and think "but my business is much more than just the financials". This is most likely true - every business has a host of intangibles that are mixed together to create an appealing business that works well. These intangibles do work together to build value in your business, but in the end, buyers are looking to gauge the riskiness of their investments, and financial statements help them do so.
But it goes a step further - whereas financial statements help a buyer gauge the riskiness of a particular acquisition, detailed and accurate financial statements that are easily verifiable help a buyer put to rest certain perceptions of risk. The point here is often lost on many people considering selling their businesses: detailed, verifiable, and clean financials can help you sell your online business faster and for more money.
Recommendations - If you think you may be selling your business in the near future do what you can to get your finances in order. This would include either hiring a book keeper or buying a version of Quickbooks and learning how to use it. Be sure to separate your business activities from personal expenses and income as well as other business activities. If you are able to, setup a dedicated business entity for the business you wish to sell - businesses that can be verified with tax returns are absolute gold to prospective buyers as it opens up the possibility for them to get a loan to buy your business.
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