Every business has a shelf life in an entrepreneur’s portfolio, and if you feel like your time with your business has come to an end, it might be time to sell. But selling a brand is a daunting process, and there are many pros and cons to consider when deciding whether a sale is right for you.
The most obvious benefit of selling your brand is the significant financial gain. Successful e-commerce brands with solid financials can sell for 4-5x the value of the business, leaving the seller with a solid profit – and the potential for running a highly profitable e-commerce business will only continue to grow. The chart below shows how e-commerce revenue is projected to increase through the year 2026.
Many entrepreneurs fantasize about building a brand that sells for millions and sets them up for retirement. As the e-commerce market expands, these businesses present a straightforward way to invest in your future and potentially make a large sum of money.
If you only have one brand, approach your sale with caution. Consider your options and decide what strategy is best for your financial situation. After selling your brand, there is an undeniable decrease in cash flow. How you respond to this situation as an entrepreneur will play part in determining your success. Every selling situation is different, but there are a few questions to consider:
- Is this my primary/sole source of income?
- Do I have enough cash to reinvest and live comfortably?
- What is my plan for next year? The next 5 years?
The economic cycle ebbs and flows, and you’ll want to be prepared for the unpredictability of the market as you’re considering selling your brand.
Selling your e-commerce brand is a risk, but all successful entrepreneurs know that you have to take risks to get rewards. Many entrepreneurs find lifestyle flexibility and the opportunity to pursue their next ventures after a sale. Selling a brand can mean entering a new market, uncovering a new stream of revenue, or even freeing up more time to enjoy life. Whether you want to continue competing in the business world or take a break from the grind and relax, selling your e-commerce brand can create considerable opportunity to do so.
CON: Giving up control of your brand identity
Another challenge of selling your e-commerce brand is handing over something you’ve created and put lots of time, money, and energy into building up. Letting go of all of that hard work can be stressful for sellers who care about their brand’s reputation, so it’s important to communicate with your buyer about the future they envision for the brand. Evaluate your buyer by considering who will be the best business partner following the sale and during the transition, and make sure your lawyers know what kind of conditions you expect the seller to uphold after the sale goes through.
Selling a brand is both an ending and a beginning. One common way entrepreneurs “begin again” is by reinvesting – into a new brand, a startup, or their own bank accounts. With the influx of cash from a sale, entrepreneurs can capitalize on new openings in the market. Selling your e-commerce brand may open the door to building multiple new brands with the profits by branching out into an entirely new niche.
CON: Starting Over
The entrepreneurial spirit does not sit still, so many sellers don’t want to take their payday and settle down. For them, selling a brand is a strategic move, especially if they’re looking to build a new brand. Unfortunately, creating a new brand demands a lot of time and energy; starting over means building new inventories, creating new services, obtaining new customers, and much more. While this poses a serious challenge, it’s also an excellent time to learn and grow into a seasoned entrepreneur.
Seller Accountant can’t tell you when to sell or what to do next, but we can help guide you through the sales process with experienced CFO services and expert financial planning. If you are interested in selling your brand and creating a game plan for success, contact us for a free consultation.