Let’s face it, scaling and selling your Amazan FBA business is no simple feat. Add to the equation the challenge of finding the perfect time to sell, and things can get tricky. No doubt, it’s a big question that many sellers struggle with.
You’ve built something exceptional, now you want to reap the rewards. The question is, when?
Timing is a crucial factor in determining your maximum payout.
And yet, what are some key indicators that can help predict the opportune time for you to exit? How do you know if your brand is truly ready for an acquisition?
Consider the following key indicators that’ll tell you if the time is ripe for your ideal exit:
Your business has consistently stood strong for a long while.
Aggregators are looking for an experienced business with a reliable reputation. Ideally, they are looking for brands that have been around for over 2 years or so. If your business has already been around for a significant amount of time, you are better positioned for an exit.
You’ve experienced tremendous financial growth.
How much profit is the business making with all expenses considered? The more profit your company is making, the higher multiple you will likely get. Is it profitable? Is it growing? Is it scalable? If you can answer yes to all those questions, your business may very well be ready for an exit.
Brand strategy is one of your top priorities.
Having strategic methods in ways in which your brand will continue to gain traction will not only make your brand highly appealing to an acquirer, it will also lead to you getting a higher payout. An example of this is demonstrating to an aggregator that you have recently invested in video ads that have been converting successfully. If you can show the aggregators how those video ads will continue to convert well for the next 12 months, this shows that your business is more ready for an exit.
Your standard operating procedures (SOPs) are rock solid.
Brands that have standard operating procedures in place for obtaining inventory, responding to customers, daily processes and procedures, etc. – make a buyer’s job way easier. Simplify and standardize your company’s operations and watch your buyer pool increase.
SOPs save time and money, make it easy to monitor the performance of employees, facilitate communication, improve employee accountability, help organizations increase productivity, minimize the impact of employee turnover, and more.
When there’s the advantage of it being a seller’s market (a.k.a. right now!).
The higher demand there is for buying off your niche brand, the higher payout you will receive. The Amazon Aggregators have attracted $13+ Billion in capital raised in the industry. The market is currently very lucrative and it is a great time for business entrepreneurs to take advantage. So, generally speaking, now is the time to explore your options, whether you’re ready or not simply because it is a seller’s market.
Now let’s talk about some indicators that you should hang tight, fine-tune, and give your business some more time to flourish before selling.
You’ve got unregistered products and/or company names.
If you don’t yet have a registered IP, website domain name, social media handles, and trademarked products, then it would be conducive to getting that taken care of before exiting. Amazon Aggregators will periodically back out of deals if a business isn’t properly registered or trademarked. Undoubtedly, your business will be valued at a higher value once you do so.
Your profit margins have been heading south.
It’s okay, it happens to the best of us! A decline in revenue production, lack of cash flow, difficulty in managing operations, performance decline due to the economy. All of these are indicators that the business requires more input before it is sold.
You want to sell your brand when business is booming and investors see that your company is worth the investment. You want to get the highest payout possible, and not a penny less. Just look at Yahoo. They had the option to buy Google and Facebook in their earlier years and declined. They were worth $128 billion in their prime and ultimately sold to Verizon for a sum total of $5 billion.
Nothing seems to differentiate your brand or products from the competition.
Do your products have a competitive edge over your competitors? Are they unique? A successful product concept is likely to be in higher demand and will help outrun your competition. Differentiating your products in some way makes your business more appealing and creates a more profitable path ahead. If this is not the case for your current products, you may want to sit down with an engineer and brainstorm a few winning products.
Conclusion – The Seller’s Mindset
As you know, running a business can feel like a rollercoaster at times. And figuring out when to exit is one of the most commonly challenging aspects. But we’ve found that it all comes down to one thing. That one thing is whether you’re able to build your brand with a seller’s mindset or not. A seller’s mindset means that you’ve strategized your exit from the very beginning of building your business. It means setting appropriate and realistic expectations and goals and meeting most of them. If you can do this, then you will have much better chances of knowing when it’s your time to exit.
But how do you know which goals are important for your business and how much time to give yourself to meet them? That’s where we come in. We’d be happy to help strategize your growth so that you can have the exit of your dreams. No commitment necessary or any hard selling. Just strategic, solid advice.