Shopify is currently the most perfect tool for small business owners to grow their operations, primarily due to Shopify’s unbeatable ease of utility. The growth of the platform has attracted investors seeking to both acquire and scale storefronts. Creating a store of Shopify can translate into money-making opportunities for both sellers and buyers.
However, with so many sellers vying for a share of the online consumer pie, competition has naturally become cutthroat. So when the time comes to scale such a business, small sellers are presented with a number of impediments – limited capital, lack of expertise, and few resources being some of them.
Perplexed, many online businesses may seek a way out. In case you are considering or are planning on selling a Shopify store, here’s a guide that will serve as a useful resource for your journey.
Things to always remember when selling your Shopify stores online
1. The worth of your business
Your business’ worth is essential when it comes to making a successful sale. You can determine this worth using several factors as detailed below:
- Age of your business: An operations strategy that is resilient and well-oiled will mature into a profitable business. The older your business, the higher your multiple usually.
- The number of products: To reduce your business risk, having diversified sales across a brand’s product portfolio is vital. Several factors impact this such as reduced exposure to a potential supply chain and shifts in demand.
- Diversity in traffic: A business with multiple sources of drawing traffic remains less reliant on a single source to generate the bulk of its sales. Overall, this provides a better valuation.
- Revenue: An increase in profits or revenue tends to positively impact the valuation multiple.
- Brand Recognition: Businesses with distinct brand recognition are bought up more easily than those lacking a brand value. With brand recognition comes an established customer base and footing on the internet and social media.
- Operations: Improving your operations can be a good way to ensure that the subsequent sale of your online business is smooth. This is where decisions to add value, increase efficiency and margins, and cut costs are taken.
By taking these factors into consideration, you can ensure you come up with the best possible multiple for your business.
2. Whether your business’ valuation can be increased
Prior to listing your Shopify store for sale, you should ensure that it is in its best possible shape. Sales are vital when it comes to the health of the business. However, several other factors also come into play when you are estimating your business’ valuation before you sell Shopify stores. The below factors help determine the worth:
- Product Range: Acquirers that are strategic in their buying strategy are likely to purchase shops that tend not to rely on a single product for more than half of their overall revenue. By increasing the range of your products while maintaining your sale count, you can grow your business valuation.
- Social Media: Selling a Shopify store is impossible without considering its valuation through its social media following as well as the demographics of the followers. In today’s digital age, many businesses know the importance of using social media for business. The correct approach towards social media can propel your business to heights never seen before. However, similarly, the wrong approach can lead to a massive amount of wasted resources for minimal returns. In today’s world where social media’s influence is stronger than ever, businesses must adapt in order to increase their worth and Shopify stores are no different.
- Reviews: Your performance on Shopify is dictated by reviews, revenue and traffic, order value, and more. Good reviews overall can significantly impact your valuation positively.
- Traction: Things like cost per click, the traction your business gets from digital adverts, conversation rates, if increased, can boost your business valuation.
3. The reason to sell your business
Knowing your own motivation and those of potential buyers is crucial before selling a Shopify store. Being in touch with the ‘why’ behind your decision to sell your business will enable you to draft a strong description for your listing, and attract the right buyer for the price at which you’ve marketed your listing.
Being in tune with the reason for selling a Shopify store also leads to greater clarity for potential buyers, which will likely allow you to get the best possible offer. Most importantly, if you haven’t considered alternatives to selling your store, it is important that you do so before all else. When your store no longer aligns with your entrepreneurial abilities and needs, it might be a good time to let go of it.
4. How to prepare your listing
To ensure you can get the best value for your business or even increase it’s worth, planning ahead about how to best present it to potential buyers is a great move. Here are some of the key points to aid you in preparing your listing.
- Compile profit and loss statement: When it comes to what investors look out for when browsing Shopify stores for sale, nothing is as crucial of an element as the business’ profit and loss statement. The reason this statement is important is that prospective buyers are eager to compare the company’s profit/ loss performance of your e-commerce store.
- Strategize maintaining sales numbers: Try to remove bottlenecks in your business operations that can help your store remain a powerful revenue-generating tool, that is a feature most attractive to potential buyers.
- Make expansive decisions: Choosing to increase traffic sources and launch new products before the sale can enable a good mindset before selling a Shopify store. Additionally, these decisions could positively impact the worth and valuation of the business.
The Bottom Line
Selling a Shopify store can be challenging with so many e-commerce stores widely available today. Reflecting on the ‘how’ and the ‘why’ of your selling journey can make a massive difference to your sales prospects. Check a detailed guide on how to sell Shopify stores online.