Welcome to this week’s issue of The Exit Journal. Your weekly guide to everything you need to know to sell your online business.
It may sound wild, but thinking about who may want to acquire your online business, before you even file your first tax return, could be the most important consideration you make. Let me explain.
This week in broker-land, I’ve been navigating finding great buyers for a number of really profitable and growing ecommerce businesses and coming up against a consistent constraint.
Money is expensive right now, and with business buyers becoming savvier by the day, thanks to such an influx of Entrepreneurship Through Acquisition (ETA) content, buyers are hesitant to pay full cash for a business. They know they don’t have to.
That’s where the SBA comes in. Buyers can acquire a profitable ecommerce business with only 10% down. Sounds like a dream right? And as far as I can tell, as long as you have a decent credit score, money in the bank and some business experience, it’s not hard to get pre-qualified for an SBA loan.
The problem? Your business also has to qualify.
Unfortunately, having a ‘great business’ is simply not enough to convince the government to fork out a million dollars to back your business. The SBA lenders are scrupulous, and will go through your business in immense detail.
So what are SBA lenders looking for?
At a minimum, to qualify, your business must have 3 years of Tax Returns that match your P&L. So if you’re thinking about doing some funky accounting to keep your profitability low, keep in mind that a buyer will only be able to offer you what the SBA approves.
You can’t go back in time, and I don’t want you to be one of those business owners who struggles to get a cash offer. Having your financials in order is the number one thing you can do to set yourself up for a lucrative pay day.
As always, the best exits happen when you prepare before you’re ready.
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-Stephanie Veal
PS. If you’re curious what your business could be worth, or just want to chat about what an exit could look like, feel free to grab a time on my calendar.
In Other News…
At FinCon earlier this year, I had the pleasure of bumping into fellow Aussie, Glen James, from the Money Money Money podcast and he invited me on for a very improptu interview to chat all things business buying and selling.
You can watch it here, or listen to it here.
I’d love to hear your thoughts!
If you know someone considering an exit, send this email to them!
Cheers,
Stephanie
I am an M&A Broker affiliated with Flippa. This content solely reflects my own views/opinions and does not reflect the views/opinions of Flippa.