Hi there, my name is Daniel and I just sold my first business. It was an awesome experience with many ups and downs, nevertheless, 10/10 would do again.
This post is simple, most eCommerce stores sell for 3x profits. I sold mine for 10x and I’m going to show you how.
Rewind to 2014, I was fresh out of university working a regular engineering job. I wasn’t being challenged so I was always looking for business ideas, but ideas never came.
Then one day, I came across a Reddit post about two guys starting a subscription service. They broke down everything they did step by step and I was mind blown going through the thing. Holy shit, this was so perfect and so….simple.
I’m going to start a subscription service for coffee, better yet, I’ll use specialty coffee! That same day, I used my lunch break to call up suppliers and get quotes. Within a few hours, I had gone from zero to an idea to a clear plan. I was ready.
The business was simple. Every month a new coffee was selected and sold as a regular subscription, gift subscription, one-time-purchase and office coffee (bulk order 5lb min). It was perfect for the customer and simple for me.
The next 2.5 years I spent figuring how to run the business and growing it. I literally googled everything, I still do. I taught myself everything from finding suppliers to getting customers and to automating the business.
I’ll be honest, it was rough. I went through many ups and downs, but mostly downs. I learned to overcome personal barriers in overthinking, being burnt out, stressed out and so many other ugly feelings. But I got through them all!
I slowly grew the company from selling to regular people to selling to businesses, then I started shipping to the US. Oh yeah, I was based out of Toronto, Canada too. After I finally figured out a good flow, I focused on automating everything so I can work on only the important tasks.
I found a fulfillment center and the coffee started going from the roastery to fulfillment to the customers without any work from me. I spent a month writing instruction manuals on how to do everything in the business from ordering supplies to handling customer service. Then I hired a freelancer to take care of it all. At the time I sold the business, it took 30 minutes per week to run the business and the freelancer was the one doing that.
And then it was time to let go.
It was tough deciding to sell, I had literally created the company out of nothing. I had become so attached to it that the decision became more emotional than logical. But eventually that feeling came to pass too and I started looking at it objectively.
I had started another business that was doing very well and taking up my time too, but that’s a story for another day.
Note* Thing is, over three years worth of work went into growing this business and making it an attractive deal. I can’t write about all of it in one post, but I’ll link to the other posts in here.
Deciding Where To Sell
I had three options, broker, outreach and online listings (Flippa). I tried every single one of them.
First, I reached out to a broker I knew from FMZ Brokers. Our schedule was conflicting so it didn’t work out, but Kira (founder) was a huge help during the sale.
Next, I reached out to Toronto based competitors. I cold emailed one of them basically mentioning my selling points, they didn’t really respond and to be honest, I didn’t follow up either. Another one, I was introduced to and we met. That lead to some back and forth plus a proposal. We were still in the back and forth stage when the business sold.
Finally, I decided to look into online listing places and decided on Flippa. It was perfect, had lots of traffic so people would be able to see my listing and, most importantly, I might would get a higher return. I was sold, Flippa it was.
What To Sell
I had decided everything was going to be sold. Everything included the following:
- Website – Domain and a fully optimized Shopify site
- Subscription Platform – Recharge Apps in Shopify installed, setup and ready to go
- Customers – All regular and office coffee subscription
- Accounts – Google Analytics, Stripe, and Mailchimp (500)
- Social – Facebook (500), Instagram (4500) and Twitter (350)
- Introductions to supplier and fulfillment center – operationally everything was set up
- Trello Based Instruction Manuals – How to do everything from ordering coffee to bookkeeping for the business (this is what allowed me to outsource tasks)
- Branding – All pictures and logo (PSD)
- Inventory – Shipping material for 2 months
I knew there was a potential the buyer would be outside of Canada, so the idea was they would open their own entity and I’d dissolve the company in Canada. Luckily, this is exactly what ended up happening.
My advice if you’re looking to sell your business: make it look like a package deal and turnkey product. You’ve put tons of hours getting everything set up, make all of it a package so that it looks attractive and then you can maximize your sale price.
I spent most of my time on this. There are a couple things that will propel your listing to the top. Financials, good branding, how easy your business is to operate and potential. I went into extreme details on all these.
Here is the format I followed:
- Tagline: Be straight to the point and highlight the business
- Mine said, “2 y/o Profitable & Automated Subscription Service Making $1200/mo
- My company’s brand was very personal and casual. So I made the listing the same. It starts off just like the way this blog post started as if I’m talking to you personally.
- I broke down the business model. In a paragraph, I talked about how the coffee goes from order to coffee roaster to fulfillment center and then to the customer. Everything was outsourced and automated, I highlighted that.
- Product description and where and how inventory is kept. Mine was a single product sold in two sizes (0.5 lb and 5lb). No inventory and the business takes 30 minutes to run every week and it can be done from anywhere in the world.
- Boom, now I’ve grabbed the person’s attention. My experience with buyers has been that they don’t want anything complex. The easier the business is to operate, the more attractive the deal looks.
- What’s included – this is the same list I have at the beginning of this section
- How the business operates
- I went into further detail on the three key steps, choosing coffee, ordering coffee and shipping.
- I mentioned how long each process takes, use time estimates so a reader gets the idea.
- This was a chance to show how easy it is to run, I tied this with the Trello instruction manuals. So now, it took a few minutes to do plus there are instructions if I get lost.
- These are the kind of things your buyer will be thinking, answer it for them.
- Why I’m selling the business?
- This one was honest, I just needed to move on. I needed to find someone to take it to the next stage.
- Revenue and how you get it
- Broke down the different subscriptions and their costs
- This is relevant to subscriptions, but I mentioned the average length of customer stay, location, and subscription plan split (%)
- Talked about my operation costs in here as well
- No one cares about your P&L at first glimpse, you’ve to sell them on every step of the way. The listing is the perfect place before they can get to the attachments.
- Brag section
- I obviously bragged about the big publications I was featured in. Huff Post, Daily Hive and even Playboy (it was SFW)
- Seriously though, talk about the wins you’ve had
- Improvements aka potential
- Talked about the marketing I’ve done and what the results were. Mention anything that would help the new buyer improve the business
- Mine included suggestion on packaging, ads, SEO, email and content marketing, and international expansion
- Also, the business was in the specialty coffee industry, which is one of the highest growing markets in the industry and spells out potential
- Income Statement (TTM)
- Backup all your accounting claims with screenshots of your financials. I included screenshots of my Stripe account for the last two months in a pdf
- Other things
- Make sure the financials in your listing match the income statement you attach
- Get Google Analytics data verified with Flippa, no one will take your listing seriously if this isn’t done.
That’s it. Be as detailed as possible. Think of it as if you’re explaining your whole business to someone that isn’t even remotely familiar with the product or industry. For me, I imagined I was explaining my coffee business to someone that doesn’t even drink coffee. Do that.
Feel free to copy my layout and use it for your listing. Be thorough. The more a buyer reads, the more they should be excited.
When you actually click launch in Flippa it doesn’t automatically make the listing live. If you’re using another platform, it will probably similar to this. Their team reached out to verify my Google analytics and my financials. They had a few questions, I answered them and we were good to go. Simple.
Fast forward to Aug. 9th, the sale was finally live! 🙂
It felt freaking amazing! I was excited, but most importantly, I was ready.
An hour passes and the first message on the listing comes. A few hours after that, the first bid comes. Now we’re talking!
The site got traction very fast. Flippa realized this too, so they sent me an email to get a little bit more info so they can help boost the listing and feature it in Editor’s pick. This was only day 2 of the listing.
Things were moving fast! Within a few email exchanges, I had a Flippa account manager and a whole bunch of features added to my account. Here is what was included:
- Account manager
- Listing optimization & strategy
- Free Premium Upgrade ($249 Value)
- Assistance with negotiations & closing
- Editors’ Choice inclusion after due diligence
- Posts on Flippa’s official Twitter & Facebook account with a paid boost
- Free Flippa Upgrades (bumps to the homepage, tweets, etc.) throughout the auction
- Listed in the sponsored section of Weekly Websites Newsletter sent to over 330,000 people
- Extension of the listing by another week (not possible otherwise)
Overall, my estimate is that the added features are valued at $800 – $1000 and this doesn’t include things like the Editor’s Pick, which I don’t think you can pay for. And I only paid $29 to list.
Side note, these things aren’t really advertised so it’s definitely an insider’s scoop.
Everything was amazing, but it does come at a price, 17.5% of the selling price to be exact. This is 5.5% more than the 12% I was going to pay with Flippa Escrow as a payment method. On top of that, you have to settle on a reserve price (this the minimum price you’ll take) and you must sell if it has been met.
At the end, I decided it was a good deal and accepted it. And now with the added 1 week to the listing, it was perfect for all these free perks to settle and be visible to more people.
The Selling Part
Every single day the auction was running, I was answering questions and responding to public messages. I made myself available and made sure everyone got a response asap. As you can see below, people were excited about the listing and were asking detailed questions. I made sure every question was answered in detail.
The boost from Flippa had far-reaching implications. I was even featured on another mailing list, Opportunity Overload. All of a sudden I started receiving emails from people interested in the site too.
With all the publicity going on with the listing, things started moving very fast. I got featured on the newsletter (330,000 subscribers) and my site was the very first one as you can see below. This tied with the constant tweets, boosted posts and thousands of pages views propelled the listing to new heights.
Then the reserve was hit after 9 days. In Flippa the reserve can be hidden and mine was. It was funny because people were constantly messaging me asking what the reserve was and I always told them it will be shown after the current bid has passed it.
Advice for sellers, don’t reveal your reserve price. If your buyers know the reserve they’ll be less likely to bid to see if they pass it. You want to discourage this.
My plan worked because now the reserve was passed, the price kept climbing up and bidders kept on coming because now if you win, you got the business. Meanwhile Flippa was still going strong with the promotion.
I accepted every bidder that applied because I wanted to see how far things would go. This might or might not be a good idea. Some bidders might not be serious, luckily, I didn’t really come across that.
I messaged every single bidder I approved and let them know I was available to answer any questions they had. Some responded and some didn’t respond, which was a red flag.
Toward the last 24 hours, There was one bidder that looked like he was going to win. I messaged him a few times after there was no response, but he eventually messaged back so I had some peace of mind. I’ll be honest, I was a little worried selling to someone that wasn’t even responding. What if they back out?
Advice to bidders/buyers: always communicate with the seller and vice versa. This is a two way transaction.
I was very happy at this point, there were only an hour or so left and the price was at 60% over reserve.
I was literally glued to my screen counting the minutes.
THEN, I shit you not, 1 minute and 30 seconds left for the auction to end….I get an email with a new bid. Oh shit! I go in and approve it.
When this happens FLippa automatically increase the time by an hour.
What followed next was the greatest auction back and forth I have ever seen in my life (which was also my first).
Three bidders (mostly 2) took the current price and doubled it with 20 bids over 5 hours.
I remember ubering home and getting pinged every time a new bid came through. It was crazy, and since the bids were automated it was instantaneous as soon as a higher bid was placed.
I can’t even explain to you how exciting this feeling was. Like, wow, this is my business! I was happy.
At the end around midnight after 86 bids, 15 bidders, 240 messages and 11,000 views the listing closed at 2.84 times the reserve price.
Wow, I couldn’t even believe my eyes and to be honest, neither could Flippa.
This was a huge win for them and the platform overall. And for me, it was my first sale!
If you made it this far, thank you. I’ve been meaning to write this post for some time now and I’m happy it’s done! But this is not the whole story, I had an interesting closing experience which I wrote about here.
Special shout out goes to Flippa team, especially Lovely Ramos my account manager. Kira from FMZ Business Brokers, my lawyer, and to everyone that heard me out during this whole process. You da real MVPs!
Got any questions? Put it in the comments and I’ll answer.
You can also just say email@example.com.
P.s. here is the blog post on Reddit. I still read it again from time to time
P.p.s. if you’re looking for more content like this, my mailing list is below 🙂
P.P.P.S. Flippa also wrote a case study on my sale and you can read it here.