/ 15 min read
Sep 12, 2023
Building a Shopify store is a challenging journey. Watching something you started from scratch grow into a successful e-commerce business is incredibly rewarding.
There comes a time when you may want a change. This could be because you want to start a new business, spend more time with your family and friends, deal with a health issue, or pursue a hobby you've always wanted to focus on. Selling your business can give you the money you need to chase after your next projects or passions.
This guide covers:
decide if selling is the right move,
4 options to sell your store — with pros & cons of each.
tl;dr Whether you use a broker, a business marketplace, or your own network, selling a Shopify business can often be a complex and lengthy process — but it doesn't have to be. OpenStore's data-driven pricing method delivers accurate offers in a fraction of the time, allowing you to sell your business in as little as 2 weeks.
This is step one — scratch that, step zero. You need to be sure this is the right decision for you; creating and growing a business is a sentimental affair. Consider the reasons behind your decision to sell in the first place.
Finding someone who's committed to taking over the day-to-day operations of your store is a good option. Think about what you want from a potential buyer's goals and plans for growing your business.
When it comes to timing, conventional wisdom might not serve you best. Instead of waiting for a seasonal sales boost or a streak of better-performing months, here’s the big picture:
Savvy buyers will use advanced, data-led pricing engines that account for these variations in seasonality.
They assess the overall health and profitability of your business, not just how it's doing during the holiday season.
This means that even if your business is seasonal or if revenues have been declining for a few months, it's not necessarily bad for your chances of selling and getting a good price.
Waiting for a spike in sales could end up costing you, as each month you spend waiting for the 'perfect time' is a month you could have devoted to something new.
You may have heard that 6 to 12 months is the usual time it takes to get your business ready for sale, find a buyer, agree on a price, and receive the payout. With the right team and technology, like OpenStore, the entire process can be much faster. You could receive an offer within 24 hours and complete the entire transaction within 2 weeks. More details on that will be discussed later.
Everyone wants to believe that their idea is the next big thing. That’s why many business owners tend to overestimate the value of their businesses.
The truth is that your store's value isn't determined by the amount of time and money you've invested in it. It mostly depends on how quickly it’s growing, how efficiently it’s functioning today, and how much money it’s making.
While no one can be sure about future growth and buyers usually don't rely on it, a fast-growing business with a strong history of growth and healthy margins will be worth more than a business that's not doing so well or a business with a short track record.
Discounted cash flow (DCF) helps estimate the current value of a business based on its anticipated future cash flows using a discount rate. This is a great option for companies with positive cash flow and for those wanting a comprehensive analysis of their business’ future cash flows. DCF accounts for the time value of money, allowing for an estimate of the store’s worth by discounting its future cash flows.
Other methods use past earnings to calculate business value: earnings before interest, taxes, depreciation, and amortization (EBITDA) is a common way to measure a business’ operational profitability.
EBITDA is typically used by larger companies worth more than $10 million, while seller’s discretionary earnings (SDE) are best used for small and medium-sized stores with a value of less than $10 million. In some cases, you can use the SDE to calculate a business valuation by multiplying your annual net profit by the number of years your business has generated net profit.
That is how many buyers and marketplaces value Shopify stores, but there is a key downside:
The SDE and market multiple method is a simplistic formula that doesn’t take into account many key variables like the loyalty of your customers and the efficiency of your marketing engine — among others.
Therefore, an earnings multiplier method is commonly used for valuing e-commerce businesses. This method calculates your business value by multiplying your earnings by a factor (or multiplier), which typically range between 1× to 3× for a Shopify store. Several factors affect this earnings multiple, such as cash flow, net profit margin, customer acquisition cost (CAC), revenue diversity, brand value, and the business environment.
To offer potential acquirers a complete picture of your company’s history, you should look to use 12-24 months of reliable data.
Unlike these traditional methods, OpenStore's pricing model uses a forward-looking perspective for valuation rather than relying on historical multiples of profit or revenue. Using a data-driven approach, OpenStore considers most variables that can have an impact on your business’ valuation. Get a free, no-strings-attached valuation in 24 hours.
Plus, if you like the offer, there’s no need to read any further. OpenStore’s approach to buying your business cuts out the hassle and gets you liquidity in a matter of weeks.
When determining how much your Shopify store is worth, don't be overwhelmed by the number of variables. Each broker, marketplace, and buyer will require a unique method, but you can calculate a ballpark estimate by analyzing your company’s finances, its environment, and potential growth opportunities.
Here are some of the key factors that impact a Shopify store’s valuation:
Business model and competitive advantage
Revenue stream diversity (diversification of risk) and CAC
Growth rate in the last year, projected growth
Brand strength: reviews, product popularity, user engagement (e.g. active online community)
Customer lifetime value, customer retention rate
Assets: contracts, supplier relationships, customer lists, copyrights, employment contracts
Business environment: macroeconomic and geopolitical factors
Common mistakes to avoid during business valuation include: relying on faulty valuation models, letting emotions get in the way of calculations, comparing to competitors’ valuations, using accounting profits instead of cash flows, and sticking to a non-binding valuation that a broker provided.
The level of detail in a valuation will also depend on who you want to sell your Shopify store to. Let's dive into the four options of attracting a buyer.
We spoke with pricing experts Cindy Hao and Frederick Kuehn about the pros and cons of the three traditional ways to sell your business. We’ve also included OpenStore’s innovative approach to buying your business. It's much faster and simpler than traditional processes.
The simplest way to find a potential buyer is to look within your personal network and talk to people who might be interested in owning your online business. This could be because they want to start something new, already run similar businesses, or want to add another source of income.
Selling your store yourself allows you to have direct communication with prospective buyers and avoid broker fees and marketplace listing fees. However, keep an eye out for inaccurate valuations and non-serious buyers (including competitors).
It's essential to do thorough due diligence — vetting even your own personal or business contacts — and to seek legal advice to ensure a legitimate and fair transaction. Be cautious of sharing sensitive information too early, and make sure you have legal agreements in writing before you hand over any assets.
No broker or online marketplace fees
Leverage your insider knowledge and familiarity with your company
Complete control of the selling process, including positioning and negotiations
Direct contact with potential buyers offers better understanding and negotiation
Limited reach of potential buyers
Wasting valuable time with unqualified and non-serious buyers
Loss of customers or revenue due to time spent on selling
Legal complexities requiring consultation with an attorney and/or accountant
Emotional attachment can cause stress during negotiations
Online marketplaces are usually monitored to prevent illegal activities. However, it’s up to you to make sure that the sale is lawful and that the agreed upon payment terms are followed.
If you decide to sell through an e-commerce marketplace, you’ll reach more prospective buyers compared to the groups or communities we mentioned previously. Thousands of prospective customers will be able to see it, some of whom will have previously acquired other companies.
With Shopify's official Exchange marketplace discontinued in November 2022, finding a way to sell your Shopify store on third-party marketplaces might feel a little overwhelming. Platforms like Flippa, Acquire, Empire Flippers, or Investors Club have a wide reach of potential buyers and work similarly to how Shopify Exchange used to.
However, keep in mind that finding a buyer through a marketplace may mean a significant time investment for you. You may take dozens of interested seller calls, only to realize that most prospective buyers aren’t interested in moving forward. Additionally, many marketplaces use pricing methods that don’t take into account your business' unique attributes, which could lead to lower price ranges than you anticipate.
Access to a large number of interested buyers
Some marketplaces often offer expert advice
Depending on the marketplace, selling process can be structured and secure
Highly competitive environment
No support in listing preparation
Can take months to find a buyer
A lot of time needed to filter through interested buyers and tire-kickers
Potential for lower price range due to marketplace's valuation techniques
5-15% service fees
For example, Shopify store owners, Chris and Brendan, found that sorting through potential buyers on traditional marketplaces and brokers to be very time-consuming and filled with a lot of non-serious candidates.
If you decide to move forward, the following steps describe the usual process on how to sell on a Shopify marketplace:
Create a profile or download an app.
Make a listing for your business and include all the important information about how your business works, your marketing strategy, the assets you’re selling, and so on.
Make sure you follow all of the marketplace's rules, like keeping your business on a specific Shopify plan while the listing is up.
Chat with potential buyers, assess their offers, check their ability to pay (due diligence is key) and their marketplace rating, and accept the offer that you think is best.
Arrange the payment via escrow or another transaction method on the marketplace.
Once the buyer submits the payment, you transfer the assets to the buyer. Depending on the marketplace, the buyer may have a period to inspect everything before they accept all the assets and the sale closes.
Once they’ve accepted the assets, the payment should be cleared. Your access is removed from the Shopify account, and the buyer becomes the official owner.
For example, Flippa is an alternative to the Exchange Marketplace with a large buyer community. The platform is auction-based. When you list a business on Flippa, aim to be as thorough as possible about every aspect of your business. You'll be asked to verify the details about your website, usually with Google Analytics or Shopify Analytics.
After you’ve added all the information, you’ll be ready to publish your listing. The recommended auction time is about 10-14 days. When the seller and the buyer agree on a price, the money transfer takes about a week. Flippa doesn’t take part in the transfer process, so you’re on your own for the final steps.
A broker is a person or company with buyer relationships. If they believe your company could be of interest to their network, they will connect you.
Some brokers focus on specific industries or niches, so make sure you find the one that’s best matched with your market segment. There are also brokers who run marketplaces, like Empire Flippers.
If you decide to sell through a business broker, you’ll have to pay them a fee — among three other drawbacks. They typically charge a percentage of the total sales price of the company, usually ranging from 10-15%.
Brokers have buyer relationships that save you time in finding potential buyers
Some brokers may specialize in your niche and understand your market
Can review your documents and business plans
Can empathize with your personal reasons for selling
Advertise your sale, find buyers, and handle legal
Brokers may charge 10-15% of your valuation even if you sell to someone else later!
No guarantee you’ll sell: can take months before you receive liquidity
Simplistic valuation methods: a blanket 2-5× multiple of your profit
Potential conflict of interest to keep their buyer connections happy over your needs
Finding a good fit with a broker can take a long time: most focus Fulfillment by Amazon (FBA) businesses and lack Shopify expertise
May not understand the emotional value of your business
For example, consider this Shopify store owner’s experience with traditional brokers. It began with a disappointing first impression as the broker firm's future prospects for Ben's brand were not encouraging — they didn't think it had potential. He also found that the process with the brokers would involve long, potentially expensive negotiations, leading to discrepancies between the initial and final offer. On top of that, waiting for a payout would have been a months-long process.
Pricing specialist and member of OpenStore’s founding team, Cindy Hao, recalls other stories she has heard from business owners over the years:
"The broker works towards the largest payout with little consideration for the likelihood of closing the deal. Some Shopify businesses that OpenStore transact with have been waiting for offers from brokers for months and months.”
Alongside the traditional methods to sell your Shopify store, there’s also a new approach you might want to consider: OpenStore.
Unlike traditional sales methods, OpenStore utilizes a data-driven pricing methodology to ensure objective, fair, and reliable offers throughout the sales process. The pricing team is made up of data scientists and machine-learning engineers who work alongside finance experts to deliver highly accurate, competitive pricing. Cindy explains:
“OpenStore's pricing technology provides objective business valuations based on both traditional data — such as financial records, Shopify sales data, and online advertising data — and more subjective data like your products’ or brand’s popularity.
Our team can turn around an offer in 1 day, and we can perform due diligence, and close agreements in as fast as 2 weeks using unique pricing technology and processes. This guarantees that you’ll save time and avoid delays, while still getting the best deal for your business.”
Quick offer: receive an offer in 1 business day
Fast and efficient: potential to receive cash within 2 weeks
Hassle-free: all paperwork is prepared for you
Committed to maintaining and growing your store
No hidden fees
OpenStore exclusively supports asset sales
Only Shopify businesses can be sold
Plus, OpenStore is committed to the continued success of your business — you can rest easy knowing it won’t be sold to another buyer or closed down the minute you sell. Here’s what Trent Riggs, another member of the founding team at OpenStore, had to say on the matter:
“Unlike other buyers, OpenStore wants to see each company grow under its own brand. Founders can see their bootstrapped business continue to thrive, knowing that OpenStore will not sell their business for a fast profit.
OpenStore is available anytime a founder is ready to sell. With offers in a day, OpenStore is for all merchants — whether they’re ready to sell or just curious what their business is worth.”
If this sounds like a good fit, click to get your free, no-obligation offer today.
Here’s how to ensure a smooth transaction whether you sell through a broker, marketplace, or to your connections.
Note that it is a lot easier to prepare your store for the process with OpenStore. To receive a free, no-strings-attached valuation is, you simply need to provide us with:
Your store’s Shopify account and ads account (for example Meta or Google)
Screenshot of your P&L statement (or do a short questionnaire)
For all other methods, the top steps to make sure you’re ready are:
Improve processes: if you're having issues in crucial areas like managing your supply chain or advertising, it's a good idea to tackle those problems first. However, OpenStore’s Head of Pricing, Cindy Hao advises against waiting for a seasonal increase in sales because savvy buyers should already be taking into account any recurring seasonality to a business.
Organize your finances & audit books: potential buyers will want to see the performance of your store. Start by using the Shopify admin panel’s built-in analytics. Use an accounting system that clearly shows categorized expenses and profits: an income statement (also known as 'profit & loss'), a balance sheet, and a cash flow statement. If you have any unpaid debts or bills: consider paying them off, or provide a clear plan for managing them.
Detail customer acquisition & operations. After signing a non-disclosure agreement (NDA guide), you can share reports on website traffic and sales, inventory lists, supplier contracts, customer databases, customer agreements, and documents related to any intellectual property you own.
Maintain operations: keep your business running as usual. Manage your financial records, restock product, and monitor marketing spend.
Make sure your business can be transferred to a new owner. Check to see if your employment contracts are transferable in case the buyer wants to retain staff after the sale, and if your store’s terms of service are up-to-date. If necessary, agree in writing on any ways you will be expected to help the new owner after the sale.
Once everything is prepared, you’ll be ready to sell your business to someone who will continue growing it.
You’re now one step closer to selling your Shopify store. Preparing your business and finding a buyer is a lengthy process. This guide outlines your options, but it’s up to you to decide what’s best for your brand.
Setting a fair price and finding a committed buyer who will keep growing your store are two crucial things you should think about. The process isn’t as complex as it seems, and getting started is the most critical step.
Selling your Shopify store might be the most significant profit you’ve made in your life. You could start a new business, spend time on a hobby, or take a break before your next big project. However you decide to sell, make sure you’re happy with the buyer and their plans.
We can buy your store
We buy qualified Shopify businesses in as little as two weeks via our hassle-free acquisition process. Two payments: 80% at close, 20% after a two-month transition. Start by connecting your Shopify account and provide performance metrics for a free valuation:
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