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The EXITPreneur’s Playbook, Joe Valley

Author

Wes Schaeffer
March 14, 2022

How to maximize the value of your online business to sell it

Entrepreneurial Tips you’ll learn today on The Sales Podcast…

  • He used to focus on the money

  • Now he focuses on how many people he can help

  • Now he makes more money

  • Self-employed since 1997

  • Was a media buyer back then

We present good information and let people make a decision.”

  • In 2005 he launched his first online business

  • Came out the other end tired and woke up and just decided to sell his business

  • His advisor told him to hold on for another six months because the market was turning around in his opinion

  • He put together some SOPs and sold in 2010, took a year off, and joined the Quiet Light Brokerage then (a team of two)

  • Last year they did $250 million in transactions

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  • Grown 55% a year on average the last four years

  • They represent the sellers

  • They don’t “sell.”

  • Considers himself an educator

  • When you’re desperate you can’t give it away

  • He was a typical entrepreneur

  • He ran his business and got sick of it and wanted to move onto the next venture, but he wasn’t prepared for it

  • Most entrepreneurs don’t have accounting in place

  • Most entrepreneurs don’t have accrual accounting

  • He didn’t outsource his accounting

  • Outsource your e-commerce accounting

  • Set a goal to sell and reverse engineer your business

  • You need to know your exit goal in dollars to know if it’s a pipedream or a reality

  • Buyers are looking for four things

    • Risk

      • Is it a single-channel vs. multi-channel?

      • Is it a young business?

      • Buy a bigger business with more history

    • Growth

    • Transferability

    • Documentation

  • Gets 300-400 leads a month

  • The valuation call is free

  • Buying with an SBA loan is fantastic

  • But SBA loans are tough for online businesses since they might be too young or they co-mingled their finances

  • You need to qualify as a business and a buyer for an SBA loan

  • E-Commerce Lending in Florida is a great SBA broker/lender

  • His median transaction size was $1.8 million and 90% were all-cash

  • SBA deals are usually more stable and more likely to close, but they take longer

  • It’s emotional

  • It’s hard to find a buy-side broker

  • He has to help the buyer as much as the seller

  • He creates a detailed P&L

  • He asks all of the tough questions upfront

  • There are lots of reasons to sell a business

  • Entrepreneurs get shiny-object syndrome and want to move on

  • In the vast majority of businesses, the bulk of the money is made when the business is sold, i.e., when Elon Musk or Jeff Bezos “sold” by going public

  • Most people don’t take a lot of money out in the early years

  • In 2021, about 30% of buyers were FBA Aggregators—Fulfilled By Amazon

  • This is new in the last five years, Thrace.io is the biggest

  • The other 70% are private equity firms (20%) and smaller entities buying for themselves (50%)

  • “Acquisition Entrepreneurship” – “Buy Then Build”

  • You should like what you’re doing

  • There will be tough periods so it helps to have a passion

  • Training and Transition period

  • Hold back 20% to keep the seller around

  • 2013 he closed 23 transactions that were sold by what he’d call kids today

  • We’re in a different world now

  • People know what an online business is today

  • Transaction size has grown 10-fold

  • 3.7 offers per listing

  • But it’s not as crazy as real estate

  • Younger businesses are growing quickly

  • This is not a passive investment

  • You’re buying a job

  • Most transactions are done remotely, without meeting in person

  • He does best when he focuses on one thing

  • His one thing is M&A, so he doesn’t mess with crypto

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