What makes an online European business for sale valuable?

Why it is interesting to sell your online business

Potential buyers of a business for sale in Europe are looking for existing successes: online shops that are doing well, have an established position, an interesting margin and sufficient growth potential. If your shop meets these criteria, chances are there are quite a few potential buyers. At the same time, you may wonder whether you should sell your shop if you meet all these conditions. After all, you earn money from it.

Yet there may come a time when a sale is interesting. As the founder of the webshop, you have a vision and a bond with your own company. You have been working on it from the start and have put many hours of labour and capital into its success. Yet research shows that a founder has less chance than a buyer to run his or her shop successfully after 5 years. Perhaps because the buyer has a different, innovative way of driving the growth of the webshop, or simply because the buyer has a lot of experience in buying and growing webshops. Whatever the reason, the prospect of this success means that the buyer is prepared to make a substantial investment in your webshop. And the price paid by the buyer is not only determined by the current turnover, but also by what can be achieved in the future. Therefore, not every shop is suitable for a sale.

When can you sell your online shop?

A webshop needs to show enough signs of health before you can sell it. The age of the shop plays a role in this, but the financial results are also important. In addition, a buyer will be interested in the growth potential of the shop. Are there untapped opportunities, for example in the area of the underlying technology of the webshop (the CMS), functionalities (think of live-chat support, for example) or conditions (shipping and return policy), or other additions (an app).

Does the webshop have a strong position in the market that cannot be replicated easily? Harvard Business School professor Michael Porter defines three forms of competitive advantage.

On the one hand, cost leadership: is your webshop the cheapest provider in the market?

On the other hand, products with unique (more high-quality) features and/or excellent service. Customers are then prepared to pay more for these.

Finally, focus and specialism. If necessary, focus can be combined with one of the other forms of competitive advantage mentioned earlier. Buyers are looking for a webshop with a strong and clearly defined position in the market. Not an ordinary shop.

The same goes for the marketing and sales strategy. Is all traffic currently coming in through paid channels like Google and Facebook Ads? If so, that is less interesting than if the webshop mainly brings in unpaid organic (SEO) or referral or e-mail newsletter traffic.

After all, any competitor with deep pockets can in principle ‘take over’ this traffic by bidding more for the relevant search terms. So this is not a sustainable competitive advantage. When you have an established webshop, with a (returning) circle of customers and are achieving healthy results, then the e-commerce store is ripe for a potential sale.

Take your time when selling your online business

The fact that haste is rarely the best response also applies to selling your online shop. You will get the most out of it, if you have the time to make the shop ‘ready to sell’. This way, you can optimise the results, clean up the finances and spend more time on a prospectus. This all benefits the selling price. However, not everyone is given the opportunity to take that time and sometimes a sale is simply a matter of urgency. The tips we give are applicable to both a quick sale and a sale for which you have more time.

Make sure you have complete online business sales documentation

When you start selling your online shop, one of the first steps will be to create a memorandum. The sales memorandum is a kind of brochure that puts your e-commerce business in the spotlight for potential buyers. You can put together a simple sales memorandum in no time, but the more time you spend on it, the better it gets. Besides the sales memorandum, there is more essential documentation you need to take care of. For example, there will have to be an extensive transfer document with which the buyer can start running the webshop. All financial reports that form the basis of the results will also have to be present and in order.

Draw up a pro forma profit and loss account

With the financial reports you hand over, the buyer will know how the shop is performing now. But the buyer is just as interested in how the webshop will perform in the future. Therefore, draw up a pro forma profit and loss account yourself, or with the help of an accountant. This is where you forecast the future financial results of the web shop. This may be rosy, but must remain realistic at all times. Do not forget to include your own remuneration (your salary) in the pro forma results.

Make sure there are enough potential buyers

Selling your online shop can be overwhelming. You don’t want to leave with the feeling that you could have got more out of it. A larger number of potential buyers increases the chance of a generous offer for your online business for sale. To reach these buyers, you need to be visible on one or more sales platforms. The level of interest shown by potential buyers will then largely depend on the quality of the overall offer, including the sales memorandum and financial performance.