Establishing a Shopify store is a difficult process. It is very satisfying to see something you created from the ground up develop into a prosperous e-commerce company. However, you might want a change at some point. This might be due to your desire to launch a new company, spend more time with loved ones, attend to a health concern, or dedicate more time to a long-term pastime. For making money online, you need to pursue your next hobbies or initiatives by selling Shopify store.
Selling Shopify Store is not a difficult and drawn-out process, whether you want to employ a broker, a business marketplace, or your own network.
So, how to sell Shopify store for a huge profit in 2024? In this article, BSS Commerce Shopify will discuss important factors that any owner who wants to sell your Shopify store should take into account. You’ll have a far greater chance of finding the right buyer, negotiating favorable transaction conditions, and collecting the greatest value at closing if you consider these factors before listing your company for sale.
Contents
Selling Shopify Store: Things To Consider Before Starting
When it comes to business, every little move needs to be considered carefully, and selling a Shopify store is not an exception. Even though you are not interested in your Shopify store anymore, it is a must for you to make elaborate preparations for the devolution. Make sure that you complete all these things below before putting your store for sale online:
- First and foremost, it is crucial to ensure that your Shopify store is still working well. It does not include your high profit or revenue, but the store functions and operations. Do not wait for a high auction if your store is out of date.
- What is next? Keep in mind to archive important data and information. This is a business secret and it can not be leaked, even when its next prospective boss is not your direct competitor. For instance, you should export your billing history, payout history, and transactions into your own files to guarantee customer information security and your money flows as well.
- Additionally, if you are using Shopify Capital or Shopify Credit, then you will be unable to transfer your store. The reason is that you can not sell your debt to others. So, make certain that your Shopify Capital and Shopify Credit are no longer available for your store.
- Last but not least, have a business valuation completed to calculate the fair market value of your business. Many business owners tend to overestimate the value of their store because of the normal thought that “I have invested a huge amount in it and its value is the amount I have paid”. The truth is that your store’s value mostly depends on how fast is its growth, how efficient is its function, and how much money it can generate. Everyone wants big things but it need to come up with a real database such as profit margins and growing rate for a certain long time, not with a short track record.
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How much to earn when selling Shopify store
This is a big question when it comes to putting your store into the marketplace. To figure out the best price for your Shopify store, these are some significant areas which will help you to put an exact figure for your store.
Valuation method
In general, your business is valued by this simple formula:
Valuation = Net profit x Multiple, by which:
- Net profit is often an average over a full year. By using the realistic data of twelve months, you can evaluate the true state of your business and provide potential buyers with a comprehensive story of your business’ history. The more specific information about the history of your business the buyers get, the more likely you are to receive offers.
- Besides, if your store is young or your 12-month average does not reflect accurately your current state of the business, six- or three-month averages are acceptable.
- Multiple – the shorten of sale multiple. The most difficult part of settling on a final pricing is figuring out that multiple, particularly if your shop has grown significantly. Many factors affect your sale multiple which are revealed in the upcoming part of this article.
Other more complicated valuation methods are DCF (Discount cash flow) and EBITDA (earnings before interest, taxes, depreciation, and amortization). To be more specific:
- Discounted cash flow (DCF) is an ideal valuation method option for stores with positive cash flow in the present and the future. The way DCF estimates the current value of a business is by analyzing its anticipated future cash flows using a discount rate. EBITDA is a corporate valuation model typically used for large companies which worth more than $10 million.
- EBITDA ignores tax and interest expenses so that it allows you to focus specifically on operational performance such as income and cash generation potential.
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Factors that determine your store value
The older your business is, the more it has proven itself against the test of time and the external forces of the business market that a young business could not bring. Even though the newer company can show substantial growth, we all know that a realistic experience is more highly appreciated than an expected bright future. The old companies have faced multiple challenges and continued to be profitable is one of the most compelling reasons to call for a high price.
Additionally, the value of your Shopify store is determined by how well-known and reputable your brand is. Positive reviews, a strong social media presence, high ranking for hot keywords are some stuff that all entrepreneurs dying for their business. The more popular the brand is, the higher prices you can command because buyers willing to pay more for stores that have a solid loyal customer base and a wide brand awareness – which can help them lower costs for marketing and customer acquisition.
Growth patterns and business models
Yes, your Shopify store’s business model and its scalability in growth rate can enrich its value. Your business model can play an important role in defining whether your store is a good acquisition for another company and attracting buyers. Explain for that, the more hand-off your business model is, the better for the buyers to run the store with minimal effort in management and improvement.
For example, the value implications of a dropshipping strategy differ from that of a manufacturing and stocking your own items approach. The diversity of sales channels is also a key element to evaluate the value of your store. A Shopify store that is based on several platforms like social media, website, Amazon is definitely more attractive than one that just involves one platform.
Now, let’s talk about growth trends. It is a self-evident truth that everyone cares about how your store is growing. A store with steady growth over the course of the year is more likely to command a higher price than one whose revenues are erratic or dropping.
Traffic and conversion rates
The next 2 factors that can make out the value when selling Shopify store are traffic diversification and conversion rates. For businesses, especially online businesses, marketing and advertising are the key to success and they are also the 2 parts that gobble up money. A high rate of organic traffic (visitors who find your Shopify store through the natural and free tool – search engine results) shows the efficiency of SEO techniques. It is also undeniable that traffic that comes from multiple sources is always better than just splashing out on Facebook ads and Google AdWords – because these 2 channels may not bring you the high profit to deserve with the huge amount you spend on them.
Getting traffic is the first step, and how to convert traffic to purchase is a considerable problem – which determines the survival of your store. The portion of visitors that complete a purchase is known as the conversion rate. The higher the conversion rate is, the more successful your advertiser is and the more sales you gain.
So, if you want to increase the profits when selling your Shopify store, you must have increased traffic and an impressive conversion rate.
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Revenue and profit
For selling Shopify store at the highest value, revenue and profit is the most important factor. In the final analysis, the primary determinant of your store’s value is how much money it makes. You are good at business communication and marketing, your store is widely known by society and gain extensive traffic, but if all those successes do not generate real earnings, your store is worthless. A store’s reputation is usually more favorable if its revenue has been steady or increasing during the previous two to three years.
For example, there are two similarly valued Shopify store: The first one has notably higher profit margins and an extensive market share, the second one with razor-thin profit margins is trying to fight against the sizeable competition. At first sight, it is clear that the first one is a better buy for all buyers.
Operational efficiency
Besides business model, growth trend, and revenue, buyers will adjust the efficiency of your business operations such as seamless inventory management, efficient order fulfillment, solid vendor relationships, and streamlined customer service processes to make sure your Shopify store is still well-run. Because they suggest that a seamless transfer from buyer to seller will be feasible, stores with these characteristics may frequently charge a higher price.
Discover more: How To Increase Sales On Shopify Without A Discount Strategy
Best places for selling Shopify store
After evaluating the value, you might wonder where to sell Shopify store. The simplest and cheapest way to find a potential buyer is to look within your network. However, not everyone has a wide relationship in business, and finding a suitable buyer in a limited circle of relationships is not an easy game. If you don’t have a buyer willing to take over ownership of your store, then you can put your store disposal post on third-party online business marketplaces. Below are some popular marketplaces for your reference.
Flippa
With a huge user base of 3 million, spans more than 100 countries, and more than 3 hundred thousand digital assets sold worldwide, Flippa is an ideal marketplace for selling Shopify stores, websites, and many more.
Using Flippa, you will be provided with a valuation tool, legal resources, and even brokers who help you with sales and find the potential buyer. If you are a small Shopify entrepreneur and do not have much experience in this field, you can still get the best deal thanks to the useful tools and professional brokers of Flippa.
On the contrary, the drawback of Flippa is that if you need more hand-holding, they don’t have the services or automation available at some of the other options.
Business Exits
If you want to sell your Shopify store at the highest rate, Business Exits is a great pick. This marketplace set off with extremely in-depth brokerage experience and the ability to sell businesses across multiple industries.
The best thing is that Business Exits can assist you in finding the finest deal because it has a large database of several thousand buyers. In addition, the broker handles the majority of the grunt work, such as advertising your company, responding to inquiries about it, and settling on the best possible sale price. It also allows sellers to keep 70% of closed deals, which is a fair figure for most sales prices.
Acquire.com
One of the top famous places for selling Shopify store is acquire.com. Founded in 2020, Acquire.com is a young marketplace in comparison with other famous marketplaces like Flippa and Business Exits. However, the lack of age does not prevent Acquire.com from attracting its users by innovative tools and features.
By using a paid membership model for buyers, Acquire.com focuses on getting vetted buyers in touch with sellers. This method is extremely effective in eliminating numerous spam buyers from the equation for sellers. It is also a unique selling point of Acquire.com that other marketplaces do not come with. With a strong buyer base and modern user interface, it is increasingly widely used and has become the ideal choice for many businessmen, not inferior to the old marketplaces.
Open Store
If you are looking for a marketplace for selling Shopify store without having to do too much work, the Open Store is one of the best choices for you alongside the other traditional methods and marketplaces. By listing your Shopify store on Open Store, you gain exposure to a targeted audience of qualified buyers interested in investing in e-commerce businesses.
Go into details, Open Store utilized a data-driven pricing methodology to ensure objective, fair, and reliable offers throughout the sales process. You do not have to use those valuation methods mentioned above, Open Store has a pricing team, which is made up of data scientists and machine-learning engineers who will on your behalf, make a valuation of your business. Rest assured that you will get the best rate for your store since the experts study both traditional data like financial records, sales data, online advertising data, and other subjective data like your products’ quality and your brand’s popularity.
Plus, Open Store commits to maintaining and growing your store, and you can rest easy knowing it won’t be sold to another buyer or closed down the minute you sell. Thanks to its simple acquisition process, once the transaction has been done, you can receive cash in as little as two weeks without any hidden fees. In addition, you may be sure that you’ll obtain the best bargain possible for your company and save time by avoiding delays.
BizBuySell
Founded in the year 1996 with over over 65,000 listings and 3 million monthly visitors, and over 25 million dollars revenue, BizBuy Sell is the largest market for business that are for sale.
Integrated with BrokerWorks, multiple businesses for sale can be listed at once so you do not have to wait for your sale approval. It also provides sellers with a place to calculate the value or the business as part of their listing. This may be especially beneficial for sellers, as determining a firm’s worth can be difficult and vary depending on the sort of business.
Overall, selling your business on BizBuySell can provide you with a broad reach, targeted audience, valuation tools, confidentiality, customization options, support, and cost-effectiveness. These advantages make BizBuySell a valuable platform for connecting with potential buyers and facilitating the sale of your business.
Selling Shopify Store in a step-by-step guide
Step 1: Post Your Business into the Marketplace
Skip this step if you decide to make the best of your personal network or hire a broker. It is effortless to list your store for sale. To get started, it is obliged to answer some questions about your business and the staff will review your submission.
Step 2: Business Valuation
Having an idea of how much your business is valued is the trickiest aspect of selling Shopify store. Make sure to undertake the mentioned valuation methods or take advantage of the valuation feature of your marketplace to set a suitable price for your business. If you try to determine a far greater sale price than its real value, it will lower your opportunity of achieving a successful sale decrease. Reversely, if your set price is far less than its actual valuation, then forget it because you did not understand the true value of your Shopify store.
Step 3: Pre-Listing Preparation
Getting everything in order and setting yourself up for success are the main goals of the pre-listing preparation. The documents you should prepare include profit and loss statements, the net income, and the Buyer’s Guide to convince possible investors that your Shopify shop is worth paying a premium valuation for.
Remember to put all your effort in making these comprehensive documents because they will enhance your chance to pitch what the e-commerce store has to offer and what needs to be done before the listing.
Step 4: Publish Your Listing
This is the time when all that work pays off. To make your Shopify Store truly stand out from other listings of a comparable size, you should have the greatest listing feasible.
Step 5: Set Up Escrow
It is necessary to go through a sale with escrow protection. Some marketplaces will provide sellers with an escrow lined up for all transactions, but others do not and you have to be responsible for this.
Step 6: Transfer Ownership of the Shopify Store
Once the deal has been done and the money is in escrow, it’s time to transfer the ownership of your Shopify store to the new owner.
Step 7: Collect Money From The Escrow
The transaction is complete and your store no longer belongs to you. The buyer has their new Shopify store and you get a huge amount from your investment.
That is the full process of how to sell Shopify store. Now, let’s take a look at some useful tips and tricks to sell your Shopify store smoothly!
Tips for Selling Shopify Store
- Define the right time to sell: As mentioned above, you can not sell your Shopify store if you are using Shopify Capital or Shopify Credit. Therefore, make sure you have finished the necessary capital improvements. Besides, market conditions and the supply are some noticeable elements that indicate whether it’s a good time to sell.
- To help with a shop ownership transfer, you must empty your Shopify Balance account and get in touch with Shopify Support if you have an active Shopify Balance.
- Create SOPs – Standard Operating Procedures before selling. This is a detailed instruction for your staff to carry out routine operations accurately, effectively and consistently.
- Build a timeline to undertake the transition
- Describe any conditions that need to be met by the new owners, such as present employees’ employment agreements, any brand assets or marketing policies that already exist, existing contracts or professional relationships with third parties (such as fulfillment services or payment processors).
- Inquire about any legalities surrounding selling an online store since it can be tricky to transfer domain names, hosting companies, social media accounts, trademarks, and more.
Conclusion
Selling Shopify store might be the biggest financial gain of your life. You may take a break before working on your next major project, launch a new company, or indulge in a pastime. Make sure you’re satisfied with the buyer and their intentions regardless of the method you choose to sell.
You can make sure that you’re appropriately preparing your business for sale, valuing it accurately, and selecting the appropriate sales platform by following our step-by-step tutorial on how to sell Shopify store. Throughout the process, maintain an open mind and don’t be hesitant to seek expert help if necessary.
Selling a Shopify store is getting closer by one step at this point. It takes time to get your business ready and locate a buyer. The most important thing to do is to get started; the procedure isn’t as complicated as it seems. BSS Commerce Shopify hope your store sale goes well!
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