How-To

Digital Nomad: 4 Steps to Mastering the Fine Art of Work-Life Balance

by

Introduction

Digital nomads are individuals who leverage technology to work remotely while embracing a location-independent lifestyle. They have the flexibility to choose their work environment, often traveling and living in different places while maintaining their professional responsibilities. The concept of digital nomadism has gained significant popularity in recent years due to the appeal of a flexible work-life balance.

Digital nomads are drawn to the idea of having control over their time, the ability to work from anywhere, and the opportunity to integrate work with their personal lives. The appeal of a flexible work-life balance for digital nomads can be attributed to several factors such as freedom and autonomy, location independence, increased productivity, personal growth, integration of work and leisure among others.

digital nomad

Step 1. Understanding the Digital Nomad Lifestyle

The digital nomad lifestyle refers to a way of living where individuals leverage remote work opportunities to work an travel simultaneously, often on a long-term basis. They use technology to perform their work tasks remotely, allowing them the freedom to choose their location and work from anywhere with an internet connection.

Key characteristics of the digital nomad lifestyle include:

  1. Remote Work: Digital nomads typically engage in work that can be done remotely, such as freelance work, entrepreneurship, or remote employment. They use online communication tools, project management platforms, and other technology to collaborate with clients or colleagues.
  2. Travel: Digital nomads embrace a mobile lifestyle and frequently change their physical location. They often explore new cities, countries, and cultures, immersing themselves in different environments while maintaining their work commitments.
  3. Flexibility: One of the main advantages of the digital nomad lifestyle is the flexibility it provides. They have the freedom to set their own schedules, choose their work hours, and design their routines according to their preferences.
  4. Independence: Digital nomads often work as independent professionals, allowing them to have control over their projects, clients, and income streams. They are self-reliant and responsible for managing their work-life balance and professional development.
  5. Community and Networking: Digital nomads frequently seek connections with like-minded individuals and often join digital nomad communities or attend co-working spaces where they can interact with fellow nomads, share experiences, and collaborate on projects.

Digital nomads enjoy a considerable degree of freedom and flexibility in managing their work, which contributes to their long-term success and satisfaction.

digital nomad lifestyle

Step 2. Challenges of Work-Life Balance

The digital nomad lifestyle offers freedom and flexibility, but it also poses unique challenges to work-life balance. Here are some of the challenges that they face when it comes to work-life balance.

  1. Blurred boundaries: The line between work and personal life can become blurred for digital nomads. With no fixed office hours or separation between work and living spaces, it can be difficult to establish clear boundaries between work and personal time.
  2. Loneliness and social isolation. Digital nomads often work remotely and move frequently, which can lead to feelings of loneliness and social isolation. Without a traditional office environment and co-workers, it can be challenging to build social connections and have a support system.
  3. Time management. Managing time effectively can be a significant challenge for digital nomads. Juggling work commitments, travel arrangements, and personal activities requires strong organizational skills and discipline.
  4. Lack of routine. The nomadic nature of the digital nomad lifestyle often means a lack of routine. While flexibility is a perk, the absence of a consistent schedule can make it difficult to establish a work-life balance.
  5. Client and work demands. Digital nomads may face challenges in managing client expectations and work demands. Depending on the nature of their work, clients or employers in different time zones may require immediate responses or availability during non-traditional working hours.
  6. Distractions and interruptions. Working from different locations, such as cafes or co-working spaces, can introduce distractions and interruptions that may affect productivity and work-life balance.

Some of the main challenges in being a digital nomad are lack of boundaries, social isolation, and time management. While these challenges are surmountable, they take a degree of self-discipline and focus to overcome. 

digital nomad lifestyle

Step 3. Strategies for Achieving Work-Life Balance

Mastering work-life balance while living the digital nomad lifestyle can be challenging, but with practical tips and strategies, it is achievable. Here are some effective tips for maintaining work-life balance as a digital nomad.

  1. Set clear boundaries. Establish clear boundaries between work and personal life. Define specific work hours and stick to them, ensuring you have dedicated time for personal activities, relaxation, and self-care.
  2. Create a daily schedule. Plan your days in advance by creating a structured schedule. Allocate specific time slots for work, leisure, exercise, and personal pursuits.
  3. Prioritize Self-Care. Make self-care a priority to support your overall well-being. Incorporate activities such as exercise, meditation, hobbies, or relaxation techniques into your routine.
  4. Establish a dedicated workspace. Create a designated workspace that promotes focus and productivity. Having a separate area for work helps mentally separate work and personal life.
  5. Embrace technology and automation. Utilize technology and automation tools to streamline your work processes. Take advantage of productivity apps, project management software, and communication tools to optimize efficiency and save time.
  6. Practice time management. Effective time management is crucial for balancing work and personal life. Prioritize tasks based on urgency and importance, delegate when possible, and avoid multitasking, as it can lead to decreased productivity.

Remember that work-life balance is a continuous effort, and it may require adjustments along the way. Flexibility, self-awareness, and effective time management are key to mastering work-life balance while living as a digital nomad.

Step 4. Leveraging Hatchit for Work-Life Balance

To get started on your digital nomad journey, check out online businesses for sale on Hatchit’s digital directory. These businesses are relocatable businesses and can be run from anywhere. Prices range from a few thousand dollars and up, but most will require a large down payment to purchase. You can inquire about seller financing, SBA loans, and other forms of financing with the seller. Owning a cash-producing digital business will help you quickly realize your digital nomad dreams.

Conclusion

In short, if you decide to embark on the digital nomad lifestyle, remember to keep a few important points in mind in order to succeed: map things out before you jump in and aim to create a work-life balance that is rooted in your mental and physical wellbeing.  We encourage readers to explore Hatchit as a platform for business opportunities that align with your work-life balance goals. Big or small, new or established, we probably have a business just right for you.

1st Photo by RDNE Stock project. 2nd photo by Sarah Chai. 3rd Photo by Dziana Hasanbekava.

Selling Your Business Within 5 Years? 7 Best Things to Do Now

by

Most business owners approach selling your business much like my son approaches his homework – they avoid thinking about it until they absolutely have to. It’s understandable. For many owners, their business is their baby, their employees are their family, and they enjoy the challenge and sense of purpose derived from their work. That said, when it comes to selling, business owners owe it to themselves to begin planning early.

Good preparation leads to a significantly improved outcome – including a higher purchase price, shorter time on the market, and fewer post-transaction requirements. If you are thinking about selling your business within the next 5 years, here are the 7 best things you should do now.

selling your business within 5 years

Focus on Growth and Profitability

Generally, buyers will ask for 3 to 5 years of financial statements as part of their due diligence. Buyers like to see year-over-year growth, and consistent or growing margins. Additionally, the valuation a buyer places on your business will likely be tied to your financial statements. Therefore, it makes sense, in years leading up to a sale, to focus on growth and profitability. Consider developing a business plan to accomplish specific goals within the timeframe you have prior to exiting. To address revenue growth, your strategy might include adding a second shift, launching a new product or service, or hiring additional sales personnel.

To address profitability, you might look to increase prices, eliminate non-essential processes, or reorganize your physical space. Regardless of your strategy, make sure your goals align with your time to exit. Moving to a larger facility, for example, might be a good long-term initiative, but require more time than you have to favorably impact your financial statements.

Tee It Up for a Buyer

Any steps you can take to simplify an acquisition and better position your company for a buyer will improve its valuation. This might mean changing the structure of the business, solving capacity issues, rebranding, or putting better systems and processes in place. If, for example, you have a slow-growing legacy business under the same roof as a new, rapidly growing division, it might make sense to separate the two. Or, if you’re in an industry that is facing some headwinds, you may benefit from getting a foothold in a new market. Think about who your buyer is likely to be, and what they will be looking for in an acquisition – then work to position your business accordingly.

Make Yourself Redundant

The less dependent your business is on you, the more valuable it will be to a buyer, and the more likely you’ll be able to exit without a lengthy transition. If you currently play a critical role in day-to-day operations, look for ways to hand off some (or all) of your duties prior to selling. This might mean hiring and grooming your replacement, transitioning customer relationships to others, or giving more responsibility to your management team.

These are not easy adjustments to make. It can be challenging to trust your team with key functions, and there is some risk that changes could create problems. However, if you are successful in building a structure that allows the business to run independently, it will be a significantly more attractive acquisition candidate. Some owners decide after taking this step that they don’t need to sell after all, instead holding on to what essentially becomes an “annuity”.

move toward predictable revenue

Move Towards Predictable Revenue

Perhaps the most important determinant of value is the extent to which a buyer can predict revenue (and profit) post-transaction. Businesses with lumpy sales, whether project-based, cyclical, or otherwise, tend to be discounted. So, think about ways you can move towards predictable revenue. You might look to roll out a subscription model, offer a maintenance program, or simply ask your existing customers to sign long-term contracts with purchase commitments.

If your business is cyclical, there may be steps you can take to normalize income. A company selling ski accessories with heavy sales in the winter might look to get into beach products. Owners with highly predictable revenue often command a valuation multiple of sales vs. profit, so taking steps in this direction could be rewarding.

Keep Straightforward, Accurate Financials

One of the first steps a buyer will take is to review 3-5 years of profit and loss, cash flow, and balance sheet statements. It is important that you have these statements available, and that they provide a true picture of your business’ financial state. In years leading up to a sale, businesses should make sure they are keeping up with the basics, including taking regular inventory, reconciling bank statements, and properly accruing expenses. While audited financials are not necessary (and are rare for small businesses), buyers do look favorably upon them.

A less expensive alternative is to have your financials reviewed. It might be helpful to hire a CFO or controller, even if fractional/part time, and/or to engage a CPA firm familiar with your industry. Lastly, consider changing any “write off” habits leading up to a sale. While most business owners look to expense everything possible to keep profit and taxes at a minimum, a lower profit on your books could translate to a lower valuation.

Address Risk Areas

Some risk areas for a buyer include customer or supplier concentration, pending legal issues, old equipment, insufficient IP protection, or a lease without an option to renew. With a sufficient time-horizon, all of these areas can be addressed and improved. If you have one customer that comprises 25% of revenue year after year, focus on building other relationships and bringing on new customers to reduce the concentration. If your equipment is old, look to update it prior to a sale. Like selling a house, fixing any problems prior to selling will make for a smoother transaction.

net result

Know What You Need to Net

An important step in preparing to selling your business is to assess what you will need to net. Is there a number below which it would not make sense to sell – whether for retirement, an investment, reduction of debt, or another purpose? If so, you will benefit from working with your CPA (or another knowledgeable professional) to assess whether you are likely to achieve that number, after taxes, from a sale. Understanding your target will help you to determine your timeframe, and any steps you may need to get there.

So, as hard as it may be, it’s worth thinking through your exit plan if you expect to be selling your business in the next 5 years. You may well be able to identify a few areas where modest steps can have a significant impact on the process and net result.

We hope this information on selling your business is useful as you consider your options at home or abroad. We operate Hatchit, the global deal directory for brokered and for-sale-by-owner businesses with valuations ranging from $25k to over $20 million. Using our extensive industry knowledge, we offer a broker match service to help you find the right assistance for your seller needs. – The Hatchit Team

Images from Pixabay.

Disclaimer: This page contains affiliate links to Hatchit’s broker-partner sites. If you choose to buy or sell a business through a brokerage site we link you to, Hatchit may receive a referral fee at no additional cost to you. Thank you.

Closing the Business Sale

by

We continue to post chapters from our upcoming ebook guide, How to Sell an Online Business, to help business owners prepare for a sale. In this sixth and final chapter, we look at the seller's role in buyer due diligence and the documents needed in closing the business sale.

closing the sale

6. Due Diligence and Closing the Business Sale

Once a letter of intent or similar document has been signed, the next step is for the buyer to conduct a more formal due diligence. The buyer’s main goals in due diligence are to confirm that the business is in fact as presented, and to gain a clear understanding of the risks and opportunities associated with the business. The high-level areas of focus for due diligence are legal, financial, business operations, and market.

Legal

Legal due diligence is to assess whether the company is in good legal standing and whether there are items that could present risk to the buyer. Key areas a buyer might investigate are:

  • Corporate Structure

Your company’s corporate structure, capitalization, organizational documents, and general corporate records.

  • Taxes

Historical income tax liabilities and any tax carry forwards and their potential benefits.

  • Intellectual Property 

The company’s technology and intellectual property, as well as its protection.

  • Assets & Liabilities

The value of the assets that will be transferred with the sale, whether tangible or intangible, as well as all debts and liabilities against them.

  • Contracts

Contracts and commitments of the company.

  • Compliance & Litigation

Any pending, threatened, or settled litigation, arbitration, or regulatory proceedings and whether your company has faced any regulatory or compliance issues.

Financial

The buyer will conduct financial due diligence to verify that financial statements presented are accurate, and to gain a clear understanding of items that could impact the future financial performance of the company. For larger acquisitions, a CPA or other third party may prepare a Quality of Earnings (QoE) report to detail the components of the company’s revenue and expenses. The extent of financial diligence performed, and the quality of information available will vary considerably with the size of the business. 

business operations

Business Operations

The purpose of business operations due diligence is for the buyer to gain an understanding of the company’s people, assets, technology, and processes. For online businesses, some of the most important assets are often the business’ sources of traffic, its platform and reputation.

Market

Market due diligence is unlike other aspects of due diligence in that information is gathered from outside of the company rather than from within. However, you may be able to assist the buyer in their assessment by providing reports, contacts, and other resources to help provide them with a more comprehensive understanding of the opportunities and threats in the space.

The extent and duration of due diligence can vary widely based on the size and type of transaction, lasting anywhere from a few weeks to three months or more. The time frame can be shortened when the information requested is available and organized, so upfront preparation can be helpful.

closing documents

Closing Documents

As the buyer conducts due diligence, they will often prepare an initial draft of closing documents for your review. Depending on the complexity and size of the transaction, a purchase agreement can be very simple or very complex. While a simple transfer of a digital asset may only require a bill of sale, the acquisition of an income-producing business is typically accompanied by an Asset Purchase Agreement (APA) or Stock Purchase Agreement (SPA).

Most acquisitions are asset purchases, meaning that the buyer transfers the tangible and intangible items owned by the business from the seller’s corporate entity into a different corporate entity owned by the buyer. These items generally include everything from the website, customers, and inventory to trademarks, patents, and goodwill. By contrast, in a stock purchase, the buyer acquires the seller’s business entity itself, which includes all of the assets and liabilities contained within. In either case, you will want to work with an M&A attorney to review the buyer’s proposed draft. 

Asset Purchase Agreement (APA)

The key elements of an APA include a complete list of the assets being purchased (and not being purchased), liabilities assumed, the purchase price and how it will be paid and allocated for tax purposes, details on the closing and post-closing adjustments, seller and buyer representations and warranties, and the handling of disagreements post-transaction.

There are typically schedules attached to the APA, including financials, organizational documents, contracts, permits and other key items upon which the purchase decision was based. Lastly, there are often separate agreements simultaneously signed when closing the business sale that handle elements of the transaction that fall outside of the APA, such as non-compete or consulting agreements.

Stock Purchase Agreement (SPA)

In a stock transaction, the buyer purchases the stock of the company from you, rather than its company’s assets. In doing so, the buyer assumes title of all assets and liabilities. While many of the provisions, schedules, and ancillary documents of an SPA are similar to an APA, the document itself is often simpler, since it does not need to delineate the specific elements of the purchase, or provide as much protection to the buyer around assumed liabilities.

While buyers tend to prefer asset purchases, sellers generally prefer stock sales. Asset purchases are less risky for a buyer in that they will not assume uncertain liabilities. Additionally, asset values can be determined as part of the purchase and the re-depreciated, to reduce taxes after the transaction. Stock sales are generally more favorable to the seller from a tax perspective, and they allow for a cleaner break from the business.

transition

Transition

You will need to work closely with your team and the buyer’s team to transition the business through due diligence and after. Most importantly, you will need to inform and transition stakeholders, minimizing disruption to the business. These include employees, customers, suppliers, and dealers. Other elements requiring attention include the following:

  • Computer, software, and website usernames and passwords
  • Operating manuals
  • Stakeholder contact information
  • Vendor contact information
  • Alarm codes, safe combination, keys

Quick Answer takeaways:

  • Be transparent about any legal or other issues the buyer may raise.
  • Have your attorney review the buyer's proposed draft of the purchase agreement.
  • Write up a complete list of the operational things that need to get done before closing the business sale. 

We hope you took away a few insights that will help you with closing the business sale. Feel free to browse businesses for sale in our deal directory or download our buyer's guide. Email us with any comments, suggestions, or insights of your own. 

Images from Pixabay

How to Engage with a Business Buyer

by

We continue to post chapters from our upcoming ebook guide, How to Sell an Online Business, to help business owners prepare for a sale. In this fifth chapter, we look at how to engage with business buyers toward a signed Letter of Intent. 

business buyers

5. Bringing Buyers to the Table

With the most likely buyers identified, the next step is to bring them to the table. Institutional buyers, whether competitors, investors, or aggregators, may be easily reached through a targeted outreach. Individual entrepreneurs, however, may need to be identified with broad-based marketing efforts on marketplaces and through other channels. If your most likely acquirer is an individual entrepreneur, think through the skills that are required to run and grow the business, perhaps developing a profile like that touches on key characteristics.

Your Business Buyer Profile

Ideal buyer profile for an outdoor gardening blog:

  • gardening enthusiast
  • content writer
  • photo editing skills
  • adept with social media
  • WordPress experience
  • SEO blogging skills
  • Affiliate ad knowledge
  • Organized

Similar to advertising for a job opportunity, your marketing can highlight points from this profile to ensure you are attracting the right individuals. Additionally, the skills required might inform where you advertise. For example, attracting a buyer like the above might include marketing on gardening sites. In any case, you will likely want to take a multi-channel marketing approach that could include:

  • Business broker site (if you are working with a broker)
  • Direct confidential inquiries through email/phone
  • Online marketplaces
  • Social media
  • Local ads
  • Industry-specific ads

Multiple Dialogues

As you begin to engage with buyers, your goal should be to maintain multiple dialogs simultaneously, and to create buyer competition. Some brokers achieve this by setting dates for each stage. For example, “all prospective buyers must submit an indication of interest by February 1”. This approach can help the seller maintain control and keep buyers moving forward. As you think through your marketing plan, decide whether this approach makes sense for your business, and if so, determine the timeline and due dates so you can communicate them to buyers.

For this approach to be effective, however, you will need to be ready to share your marketing and diligence materials with a business buyer. One effective way to manage this stage is to set up an online data room. There are numerous online options including iDeals, Citrix, and Datasite – or you can simply use DropBox or Google Drive. You should expect a buyer and their team to look at (partial list):

  • Company information and ownership
  • 2-5 years of financials and bank statements
  • 2-5 years of tax returns
  • List of inventory (if applicable)
  • Customers with % of revenue
  • Suppliers with % of revenue
  • IP and tech assets
  • Any legal issues
  • Accounts receivable & payable
  • Website metrics

After initial meetings and sharing basic company and financial information, buyers may begin to make offers on the business. Offers may come as a high level “term sheet” or “indication of interest”, or a more comprehensive “letter of intent”. Once offers have been received, it is your (and your broker’s) job to vet and respond to them.

letter of intent

Term Sheet/Indication of Interest

A Term Sheet or IOI is generally a high-level, bulleted summary of the offer. Points conveyed may include purchase price, payment terms, any personal guarantees, specifics on the assets or stock being purchased, handling of accounts receivable, accounts payable and inventory at close, specifics on any non-compete or consulting arrangements, specifics on any property or other leases (or purchases), and any conditions to the offer. The purpose of the document is to provide a simple, non-binding summary of how a buyer plans to approach a deal.

Letter of Intent

An LOI may follow, or be presented in lieu of a Term Sheet/IOI. A Letter of Intent is generally a more formal, legal document reviewed by an attorney and signed by both parties. LOIs are typically non-binding, and they generally include an “exclusivity” provision. So, once a prospective seller signs the document, they may be prohibited from talking with other buyers for a period that generally falls between 30 and 120 days.

Building Rapport with a Business Buyer

It’s best to manage buyer’s expectations right from the start, particularly if there is a significant discrepancy between an offer and the price and terms you are willing to accept. In-person meetings or video conferences are generally better alternatives to phone, text, or email when addressing sensitive topics.

It can be helpful to involve a third party when reviewing and responding to offers. Involving a third party will help you to maintain a strong, cordial relationship with buyers while at the same time making a case for a more favorable deal. Individuals with whom you work with should have relevant backgrounds, present themselves professionally, and be able to articulate your position in a respectful way.

building rapport

Negotiation

Purchase price is just one component of an offer. Deal terms, too, significantly impact the attractiveness of a proposal. Is the buyer seeking seller financing or performance-based compensation? Are you required to stay on for a lengthy transition? Is the buyer proposing a stock purchase or an asset purchase, and how will that impact your net after taxes? Work with your team to understand all elements of any offer received so you can compare and assess which are workable. Some key negotiation principles that might be useful.

  • Develop a game plan
  • Focus on interests, not positions
  • Use objective material to make your case
  • Avoid emotional responses
  • Identify areas of mutual interest
  • Work toward a win-win result

Buyer Diligence

Before signing an LOI, it makes sense to do some background research on the prospective buyer. Perhaps the simplest way to assess financial capability is to ask the buyer to provide specifics on how they plan to fund the purchase. For an individual buyer, this might mean showing you a bank statement or letter from the individual’s CPA.

For an institutional buyer, it might mean providing detail on their fund size and status, and/or specifics on past transactions. It can also be a good idea to request a credit report for the buyer. You can request a credit report through Experian, Equifax or TransUnion. In some cases, it might also make sense to conduct a full background check to assess whether there exists any criminal or litigation history.

If you are fortunate, you will receive multiple offers and have the leverage to push back on unfavorable deal points. Try not to burn any bridges along the way, so you can maintain as many options as possible.

Quick Answer takeaways:

  • Pursue a variety of outreach strategies.
  • Create a data room for buyers to access your key info.
  • Don’t dismiss an offer out of hand if it is within your ballpark of acceptance.
  • Build rapport with a potential buyer to improve the outcome.
  • Make sure the buyer has the funds to close and look into their background.

Learn how to assist a buyer with due diligence and what closing documents will be needed in the next and final chapter of the Seller's Guide.   

Images from Pixabay

Identifying Promising Business Buyers

by

We continue to post chapters from our upcoming ebook guide, How to Sell an Online Business, to help business owners prepare for a sale. In this fourth chapter, we profile different types of prospective business buyers for your company. 

identifying buyers for your business

4. Going to Market

The universe of potential buyers for online businesses is wide and diverse – from individual entrepreneurs, search funds, and family offices, to strategic acquirers, private equity firms, and aggregators. There are pros and cons to each and there may be differences that will impact valuation, deal structure, and the direction of the business post-transaction. Following is some detail to help you identify which business buyers might be most appropriate. 

Individual Entrepreneurs

For smaller digital businesses, individual entrepreneurs might well be your best target buyers. The appeal of business ownership compels many entrepreneurial individuals to take on the risk of a business purchase. On the plus side, an individual buyer can share your passion for the business and pour their heart and soul into it. A business buyer with the right motivation and experience might take your business to the next level, bringing your employees along for the ride.

That said, individual business buyers are often investing personal savings as equity into a deal, and may be more likely to seek bank or seller financing as part of its structure. Sellers should confirm early on the availability and source of capital for the down-payment, and assess the viability of bank or seller financing. Additionally, with personal savings on the line, emotions can boil up and make negotiations and diligence more challenging with individuals than with institutional buyers. In general, individual entrepreneurs have less financial flexibility than institutional, particularly strategic/industry business buyers.

5 reasons to consider selling your business to a search fund

Search Funds

The search fund model is an interesting “hybrid” approach to business acquisition. “Searcher funders” are individual entrepreneurs, often recent MBA graduates, who undergo a dedicated, often two year search to acquire a single business which they plan to run. With a number of institutional investors backing search funders, many are focused on larger businesses than individual entrepreneurs, often with a minimum of $1 million or $2 million EBITDA.

Search funders can offer the passion, continuity, and immediate leadership of individual entrepreneurs, with perhaps better access to capital, more financial flexibility, and the support of a “bench” of experienced investors. That said, search funds typically do not have committed capital; their investors generally back them on a deal-by-deal basis, so there is some funding risk. Additionally, some owners may find it challenging to hand over the reins to a newly minted MBA.

Family Offices

A family office is a private investment firm established to manage a family’s wealth. While their role can vary significantly, many of these firms invest in and acquire privately held companies. Investment criteria can vary greatly based on the goals of the family, though many have a lower size threshold than private equity groups and other institutional investors. Additionally, family offices have flexibility on the hold time of their investments and in some cases will own and build companies indefinitely.

strategic acquirers

Strategic Acquirers

Business buyers that acquire companies to complement another entity are known as strategic buyers. Rather than purchasing a company solely based on its financial performance, these buyers are interested in leveraging the value inherent in the business – whether the customer base, traffic, IP, domain, or otherwise. Because strategic buyers see value beyond financial performance, they may have the flexibility to pay more for a business than a “financial” buyer. That said, extracting the value of an acquired business may mean rolling the company into another entity, which can impact the employee base, brand, and other elements of the business.

Private Equity Firms

PE firms raise private capital from sources that might include pension funds, endowments, and high net worth individuals to invest in or acquire companies. Private Equity firms generally build a portfolio of businesses which they support financially and through board oversight, with the idea of growing the businesses and selling them for a profit. The fund size of private equity groups can vary widely, from millions to billions of dollars.

Those groups with smaller funds might acquire or invest in smaller, closely held businesses, either as a standalone investment, or as an “add on” to an existing business in the portfolio. PE firms are generally sophisticated buyers which can make the process easier for a seller. That said, their goal is to grow and sell businesses, often with a 2-5 year time horizon, which is not appealing to some sellers.

Aggregators

A number of Aggregators have emerged in recent years, focused on acquiring e-commerce, Amazon FBA, Shopify, and other online businesses. In general, the strategy is to create a portfolio of small businesses around similar market segments or target customers. Aggregators, which may possess expertise in a particular space and/or benefit from the economies of shared resources, seek to build value exponentially by adding brands to their portfolio.

Aggregators range from individual entrepreneurs with a few holdings, to companies like Thrasio, which raised over $1 billion in 2018 and owns over 200 brands. Aggregators can be a good alternative to individual entrepreneurs for owners of smaller e-commerce businesses.

plan for success

Depending on the size and profile of your business, some of these categories of business buyers will be more appropriate than others. In developing your marketing strategy, think through the mostly likely buyers, and the types of buyers to whom you would feel most comfortable selling.

Quick Answer takeaways:

  • Know who your ideal business buyer is.
  • Ask questions that reveal their level of interest.
  • Confirm they have the funds to close the deal.
  • Make sure your marketing outreach is focused on your ideal buyer.

Learn how to engage with business buyers in the next chapter of the Seller's Guide.   

Image by Pexels from Pixabay.

Business Seller Marketing Materials

by

We continue to post chapters from our upcoming ebook guide, How to Sell an Online Business, to help business owners prepare for a sale. In this third chapter, we look at the important components to business sellers in telling your story to prospective buyers. 

seller marketing materials

3. Business Seller Marketing Materials

In addition to telling your financial story, it is important to tell the story of your business. Materials generally include a high-level description to use for advertising, a “teaser” document, and a Confidential Information Memorandum (“CIM”) or similar overview. Advertising copy and the teaser are generally written on a “blind” basis, so prospective business buyers can gauge interest before signing a non-disclosure agreement (NDA).

While advertising copy varies in length from a few sentences to a few paragraphs, the teaser is generally a one-page snapshot of the opportunity that can be easily shared via email or in person. CIMs are typically more detailed, and can come in different formats and lengths, from a simple PowerPoint deck to a detailed book that includes text, images and charts. While the specifics can vary by business type, size, and other parameters, categories for an online business sale often include:

  • Overview & Highlights
  • Products & Services
  • Industry
  • Platform & Technology
  • Site Traffic & Data
  • Sales, Marketing, Social Media
  • Strengths, Weaknesses, Opportunities & Threats
  • Team
  • Financial Results & Projections
  • Transaction Details

seller marketing materials

Risk and Return

Bear in mind when drafting your materials, buyers are generally thinking foremost about two things – risk and return. Look to highlight aspects of your business that touch on these things, which might include:

  • Business history and longevity
  • Recurring revenue
  • Support team history and experience
  • Organic web traffic
  • Growth history and potential
  • Barriers to entry or competitive advantages
  • Predictability of revenue and profit
  • Personal vs. business reason for selling

Quick Answer takeaways:

  • Write your business' story with an authentic voice.
  • Emphasize what makes your company unique.
  • Back up assertions with evidence.

As a business seller marketing your business, you may also benefit from insights in the next chapter of the Seller's Guide, Identifying Buyers for Your Business.   

Image by Pexels from Pixabay.