The EXITPreneur’s Playbook, Joe Valley

March 15, 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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