Building a Shopify store is a challenging journey. Watching something you started from scratch grow into a successful business is incredibly rewarding.
However, there comes a time when you may want a change. This could be to pursue a different business idea, spend some time with family, or chase that hobby you always wanted to make a reality.
You may make the tough decision to sell your Shopify store in order to unlock money that you can reinvest in your next projects or personal interests.
If you’re thinking of selling your online business, this article is for you. Read on to find out how to decide whether you should sell, how to calculate the price of your online store and prepare it for sale, and finally, how to sell your Shopify store as seamlessly as possible.
TL;DR: Selling a business is often complicated and lengthy depending on the method and platform you choose–but it doesn’t have to be. OpenStore’s data-driven pricing method delivers better offers in a fraction of the time, enabling you to confidently sell your business in as little as a week.
Should I sell my online business?
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. Evaluate the reasons you’re considering it in the first place and make sure you’re all-in on the decision to sell.
Finding someone dedicated to take over the day-to-day of your business is a good option. Consider what you want from a prospective party's motives, ambitions, and plans for expanding your company.
Past the emotional side of deciding to sell, you also need to consider whether it’s the right time. If your company is seasonal, or if revenues have been declining for a few months, think about waiting until the business is performing at its peak. It's critical to assess how your company is currently performing, its current valuation, and what you need to do to ensure you achieve your desired price.
Let’s see how to value your online business to prepare it for sale.
What’s the value of my Shopify store?
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 fact is: your company'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 it’s functioning today, and its profitability.
While future growth is uncertain and often discounted by buyers, a fast-growing business with a proven history of growth with healthy margins will be valued higher than a declining business or a business with a short track record.
To determine the value of your Shopify store, you first need to calculate your seller’s discretionary earnings. The SDE usually represents the earnings generated by your business to a buyer over a 12-month period.
To offer potential acquirers a complete picture of your company’s history, you should provide twelve months of reliable data that shows your business' genuine status.
Once you know your SDE, you can begin calculating a business valuation by multiplying your annual net profit by the number of years your firm has generated net profit. Here’s what this calculation looks like:
Annual SDE x Market Multiple = Shopify Store Value
While this is how most buyers and marketplaces value Shopify businesses, there are shortcomings. The SDE and market multiple method is a simplistic formula that doesn’t take into account many key variables like the strength of your customers, their purchase behavior, and the efficiency of your marketing engine–among others.
On the other hand, OpenStore holistically evaluates a business before generating an offer. Using a data-driven approach, OpenStore considers more variables that can have a positive impact on your business’ valuation.
OpenStore suggests: Get a free, no-obligation offer for your business in 24 hours to help determine the value of your Shopify store. Plus, if you like the offer, there’s no need to read on. OpenStore’s approach to buying your business cuts out the hassle and gets you liquidity in a matter of weeks.
Factors that impact your online business’ value
When determining how much your Shopify store is worth, don't be overwhelmed by the number of variables. Each firm will require a unique method, but you can calculate a ballpark estimate by analyzing your company, its environment, and potential development prospects.
Here are a couple of aspects to consider:
What is your business model?
Does your business sell to customers, or to other businesses? Your business model will significantly impact the price of your business.
What are your sources of revenue?
Diversified revenue is more attractive.
How do your finances stand?
How much has your business grown during the past year? What is the expected growth rate?
How established is your brand? How much do your customers love the brand?
You may sell for a greater price if you have a well-established brand in your industry, with numerous good reviews and a distinctive and popular product.
How many users do you have?
Customer lifetime value and user engagement are very important factors.
What kind of assets does your business own?
Contracts and connections with suppliers are included here, as well as customer lists, copyrights, employment contracts, etc.
The next stage after you have a value in mind is to identify prospective buyers. Let’s take a look at some of the ways you can find a potential buyer for your Shopify store.
Where can I sell my Shopify store?
We spoke with Brian Bedard—Diligence Analyst at OpenStore—about the pros and cons of the traditional methods to sell your business. He highlighted the main considerations for each option, which we’ve summarized below.
We’ve also included OpenStore’s innovative approach to buying your business. It’s quicker and easier than traditional processes, and might just be the best way for you to sell your Shopify store–take a look:
Directly finding a buyer
The first and most direct way to find a prospective buyer is to evaluate your personal connections and talk to people who might be interested in your business. This could be because they want to start something new, or maybe they already have similar businesses and want to add another source of income.
If you can’t think of anyone from your personal connections, you might want to check some groups and communities on the internet.
There are many groups where you can find people who want to buy an established business, like the r/Entrepreneur subreddit or the SaaS Products & Marketing Facebook group. This is a great way to sell your online business because you get to talk to potential buyers and choose the person that you think is most suitable.
However, there could be people who want to buy your business for a price that’s under its actual value. It’s wise to check your contacts thoroughly and consult legal experts to make sure the transaction is legitimate.
Using an online business marketplace
Online marketplaces are usually controlled to prevent any illegal activities. However, it’s up to you to make sure that the sale is lawful and handled appropriately.
If you decide to sell through an online 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 companies on online marketplaces. Some marketplaces even offer expert advice.
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.
Furthermore, many marketplaces use valuation techniques that don’t consider your business’ underlying fundamentals, which may lead to lower price ranges than you expect.
If you decide to go for this option, check out these marketplaces and consider which marketplace is best for your Shopify store:
Shopify Exchange Marketplace
The Exchange Marketplace for Shopify is a place where you can sell your Shopify store in a simple and secure way. Before you decide to sell here, you have to make sure you meet all the requirements, such as having a premium Shopify subscription and being the owner of the account.
Once you’re sure everything’s in check, you can list on the Exchange Marketplace.
How do you get listed on the Exchange Marketplace?
In order to list your business on Shopify exchange, you need to take the following steps:
Download and install the Exchange Marketplace app.
Create a listing for your business, and provide all relevant information about your business model, market strategy, the assets you’re selling, etc.
Communicate with potential buyers and evaluate their offers, then accept the offer you find most suitable.
Create the Escrow transaction in the app.
Once the buyer submits the payment, you transfer the assets to the buyer, they get an inspection period before they accept all the assets.
Once they’ve accepted the assets, the payment should be in your bank account within 5 business days.
Your information gets removed from the account, and the buyer becomes the official owner.
Note: Once you list, you can’t close your business. You should stay on the Shopify premium plan so people can examine your business and decide whether they want to buy it.
It’s also important to keep in mind that Shopify–like most marketplaces–charges service fees. The service fee–which is based on your final sale price–is subtracted from the final selling price agreed upon by you and the customer. It is made up of the Escrow fee and the projected Exchange Marketplace fee, minus Escrow's regular payout fee of $10.
The ultimate fees are revealed in the Escrow transaction itself, so you don’t know exactly what they’ll be until you’re in the process of paying them.
Flippa is an alternative to the Exchange Marketplace with a large buyer community. The platform is auction-based, and creating a listing is similar to the process we described for the Exchange Marketplace.
When submitting a business to Flippa, make sure to be as detailed as possible and provide as much information as you can on every facet of your company. You'll be asked to confirm the data about your website, usually with Google Analytics or Shopify Analytics. This is to ensure everything is in check so as to allow a smooth sale.
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 upon a price, the money transfer takes about a week. Flippa doesn’t take part in the transfers, so you’re on your own for the final steps.
Selling through a business broker
A broker is a person or company with buyer relationships. If they believe your company could be of interest to one or more of their buyer connections, they put you in touch.
Some brokers focus on specific industries or niches, so make sure you find the one that’s best suited to the market segment you’re serving. There are also brokers who operate marketplaces, like Empire Flippers.
If you decide to sell through a business broker, you’ll have to pay a fee to them. They usually charge a percentage of the total sales price of the company–typically 10% or more.
OpenStore: a data-driven way to sell your Shopify store fast
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 uses a scientific pricing approach to ensure that offers are objective, fair, and dependable 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
OpenStore’s pricing engine generates objective business values based on typical data–such as financial statements, Shopify sales data, and Facebook and Google Ads data–and more subjective data–such as the relationships brands have built with their customers.
This engine enables the OpenStore team to turn around offers, complete due diligence, and conclude deals in a number of weeks. Sometimes, the process is even shorter, according to Brian Bedard, Diligence Analyst at OpenStore:
“After submitting your business through our simple offer flow, qualifying Sellers receive an offer within 24 hours. Once accepted, Sellers schedule a kickoff call with the OpenStore closing team so that we can meet the founder and learn more about their background and the business they’ve built.
We send follow-up requests to gather standard operating information, which can be completed by the Seller within 3-4 days. Internally, we review this information and prepare signing documents, which takes an additional 1-2 days. After signing, we transfer ownership by taking over all account credentials, which is a simple 1-2 day process.
If there are no unexpected delays, and the Seller is motivated to move quickly, the total time from kickoff to closing is as quick as 7 days.”
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, 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 less than 24 hours, OpenStore is for all merchants–whether they’re ready to sell or just curious what their business is worth.”
If this sounds like your ideal set-up, head over to the OpenStore site to get your free, no-obligation offer today.
How do I prepare to sell my Shopify store?
If you’ve evaluated all the options and made a decision, it’s time to start getting ready to sell your ecommerce store. Take these steps to make sure you’re ready:
Analyze and improve processes: If your procedures are inefficient or you are failing in key areas, such as supply chain management, you should address those issues before you prepare your listing.
Organize your finances: Potential buyers will be interested in seeing an organized set of financial data that will clearly show them the performance of your online store. Try an accounting system that will categorize expenses and highlight profits transparently.
Check and update your Terms of Service: This will assist a new owner in avoiding any sticky circumstances in the future as rules will be clear and up-to-date.
Prepare employment contracts: Check to see if your employment contracts are transferable in case the buyer wants to retain staff after the sale.
Now that everything’s prepared, you’re ready to sell your business to someone who will continue growing it. As this can be a difficult and emotional process, take some time to think about your next big steps.
Time for a new chapter
Ok, breathe. That was a lot to take in, but 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 down to you to decide what’s best for your Shopify business.
Defining a good price and finding a dedicated buyer to continue your brand’s trajectory are two very important aspects you should consider. 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 venture, spend time on a passion, or take a break before your next act , opening a new chapter.
However you decide to sell your business, make sure you’re happy with the end result and buyer. Selling your Shopify store is a big step, and it’s one you want to take with conviction, speed, and simplicity.