OK, well not always so easy, but not so technically difficult either. And selling my business did not got exactly as I expected…. at all. But the good news was that the sale went pretty fast. It did only take me three weeks to flip my five year old WordPress plugin business. And the funny thing is, I had sold another software business 5 years earlier, so should have known better. But in the process, I learned lots of good lessons which I want to share with others to help you avoid the same mistakes I made. So here we go…
1) Why Are You Selling Anyway?
In my opinion, how you answer this very common question can make or break the sale of your business. Think it through beforehand, and be honest. If there is increasing competition in your niche, and you’ve run out of marketing ideas, just say that to new potential buyers. Maybe you just have lost passion to keep going, or you are looking to start a new business in another niche. Misleading potential buyers will only have them lose trust and also could give you a poor review online somewhere for future. If you just want a change and are moving onto a new business, then great, that is a valid and good reason to sell. Just disclose your intentions so the new buyer also knows that you will not compete with them in the future. You may need to add that to your sale agreement too.
2) What Exactly Are You Really Selling?
So I thought I was just selling my software business.. WordPress plugins. Pretty straightforward to me. But as it turned out, what I was really selling was not just software, but WordPress support. And further to that, it turns out that once potential buyers learned that I had over 2,000 clients, many of whom were Fortune 1000 companies over the past 5 years, they were most interested in my client list. You know, as every self-proclaimed marketing “guru” will tell you, “the money is in the list”. Well, it’s kinda true and my prospective buyers wanted my list. My point here is that what you perceive to be of value in your business may not be what the buyer values. Again, don’t sell the product, sell the “sizzle”… cheesy, but true.
3) Google Analytics Is Key
OK, so if you are going to sell your business in the future, the first thing you must do, if not done already, is to enable Google Analytics. This is the most trusted and reliable way to verify your traffic claims for a prospective buyer. The key metric a buyer wants is unique user visits per month. And they want to see that having an upward trend. Not only that, they want to see a good mix of organic (free) traffic and paid traffic. Being over 50% organic is where you want to be. After 5 years in business and some smart SEO (Search Engine Optimization), if I do say so myself (Yoast WP Plugin, lots of YouTube demos etc), I was established in my targeted long-tail (niche multiple word phrases) keyword phrases… Actually #1 in the most relevant one. Bonus points for me! 🙂 But it took awhile… So, the other great thing about Google Analytics is that you can share your account safely with buyers via a user permissions setting.
4) Net Earnings Do The Talking
OK, time to get down to brass tacks… Net earnings per month is the next key buyer trigger point. Traffic is great, but how it is being monetized is the real nuts and bolts of a business. Most software businesses have some revenue, then expenses that include paid ads, contract labour (coders) and then hosting in that order (biggest to smallest). If you have over 50% organic traffic and can turn off the paid ads, your net earnings can continue at a fairly stable rate… at least until Google scrambles their algorithm again. If you are using Google Adwords or Facebook Ads (which I’m hoping you are to some extent), then you should also be willing to sell your keywords/ad group information and learnings with the sale. This will let the buyer hit the ground running and know what ads worked best. Google Adwords let’s you export all this data easily into a CSV for example.
5) Suggest Other Revenue Streams
New buyers are looking for other ways to monetize your software or website. It’s always a good idea to have other ideas on how they could create these revenue streams, and what kind of offers or affiliate programs already work well with your business. My business was WordPress plugins, and often clients were looking for advice on where to host their sites, and also what recommend themes to use, such as Divi Builder, which is super easy to use and the world’s most popular theme right now. I suggested affiliate programs for both of those, as well as WordPress backup plugins that I know my clients asked me about also. Your unique users per month data from Google Analytics can mean an affiliate stream of income for extra revenue for your buyers, so it’s a good idea to help them out with suggestions. Share A Sale is the Granddaddy of affiliate programs that has been around for 17 years and has over 4,000 merchant offers available. You can search their site for ideas.