Recently we were over in Berlin and while we were having dinner with some friends and one of my mates, he was talking about potentially selling his business. He said: “You know, If I got to X number as an exit, I wouldn’t have to work for the rest of my life and I’d be able to get onto the next thing” I asked him: “Well, what is the next thing?” He answered: “Well, I’d probably start another business.”
After some more conversation and hours of brainstorming on my own afterwards, I thought it would be a great idea to actually talk about 12 alternatives to selling your business. This may sound weird coming from a business broker talking about why not to sell your business, but I thought this was quite interesting.
You may also find it interesting or surprising to learn that my background before becoming a business broker was actually buying and selling online assets, so I’ve been on both sides of the transaction. I’ve been a buyer and a seller, built from scratch and sold, so I have a different perspective when it comes to selling a business.
Here’s some questions that you can ask yourself or some ideas that may actually make it more interesting for you when you are thinking about selling a business. So what are some alternatives? I want to share 12 of them with you today.
[ Alternative No.1 ] – Click to skip to this section of the video.
The number one thing you could do is actually grow your business. By this I mean really doubling down and growing your business. That’s one alternative to selling right now.
[ Alternative No.2 ] – Click to skip to this section of the video.
The next is to consider is to spend more time optimizing for the sales. A lot of time I spend with clients on the sales side is actually exit planning and we’re planning six to 24 months in advance of selling that business. And this can give you a lot of opportunity to create a better business that will be more valuable when you go to sell.
[ Alternative No.3 ] – Click to skip to this section of the video.
The other thing you can do, number three, is to just let the business run. Unfortunately, sometimes a business just isn’t in the greatest spot to sell. Maybe you’ve got declining revenues. Maybe your focus is elsewhere. A legitimate option in this case is to actually let the business run and just take the cash flow. There’s nothing wrong with that. You don’t have to sell every asset, especially if you’re coming in from a position of weakness, which is a bad position to sell from.
[ Alternative No.4 ] – Click to skip to this section of the video.
Number four: you could get a capital partner on board. And this is a question I asked my friend, I said, “Well, what if you got a capital partner on board?” There’s a couple ways to think about this. First off, you could sell a percentage of your business, not the whole thing. Sell a percentage, either a minority or majority stake and they’ll pay you at today’s rate of the business, depending on the capital partner. Maybe you can take some risks, like taking some capital off the table so you’ve got some runway there for yourself and also with that capital partner on board, they won’t just want to share, they’ll actually want to help you grow the business, so you could take some risk off the table and get some capital to help you grow the business.
You can find a strategic capital partner who not only has cash to bring in, but also some strategic advantage to help you grow your business. And then it’s up to you. You could either continue running the business and have a much more profitable, larger business that is more long term, or you could have a plan of three to five years of selling the business for a much higher amount because you’ve got that access to capital and you’ve also got the baseline covered with that initial exit.
[ Alternative No.5 ] – Click to skip to this section of the video.
Number five. You could use cash flows to build a more valuable, sellable brand. In some cases, especially with FBA businesses that I talk to, there’s a growing trend of businesses, more and more types of businesses, becoming unsellable. Some of the main drivers for this includes having one main product that’s making all the income. You’re making a lot of income, maybe making a million dollars a year off one product and the rest of your products aren’t really doing much. When you can sell that business, it won’t sell for as much as if the product line was diversified.
So you could take some of the cash flow that you will making profit wise from that one hero product and really build out the product line around that target customer. That’s the key. You really want to get in tight on that customer.
The next thing you could do if your brand is kind of scouted and white label. You’re not really proprietary or different. You’re just a me too product that has a lot of different variations, so no single target customer. You’re targeting 100 and you could take that profit and focus on one of those areas. Which one is the most profitable? What is that target market? Can you build out more products for them?
Some questions to consider: Can you make the product that you’re already selling more proprietary? Can you add things to that product?
Get in deep and get into the minds of your customers and you’ll create a valuable brand. You may even have more fun running the business because you’re more engaged you’re your customers.
[ Alternative No.6 ] – Click to skip to this section of the video.
Number six: You could look for acquisition opportunities. So often when I’m talking to people and when I speak from the stage, I talk about acquisitions and you know that there’s a group mind thing happening online where you think you have to sell and then brag to your friends about having a seven figure exit, which is nice, but there’s also a flip side to this. There’s a lot of businesses for sale on the market right now. There’s about 240 listings currently. I say all the time that currently we’re tracking the whole market and what we’re seeing is only 30% of these listings are actually selling at the moment.
There’s a lot of businesses where, depending on what your strategy is, acquisition could be a great opportunity for you. You could buy at a lower multiple, bundle it together with what you’re offering and maybe sell at a higher multiple down the track. You could find a listing for a business that’s less optimized, add some value to it. This is yet another opportunity.
[ Alternative No.7 ] – Click to ship to this section of the video.
Number seven: You could hire an operations manager or a CEO to run the day to day.
So if you’re looking at doing this, don’t think you’ll find a CEO or an ops manager to run everything. My friends and clients who have tried to do this all have the same feedback:
“You need to stay on top of the strategy as the business owner when it comes to running and operating the business. You should definitely consider delegating as an everyday strategy.
[ Alternative No.8 ] – Click to skip to this section of the video.
Number eight: You can bring on partners to your business to make your weaknesses your strengths. In an Amazon related business, for instance, you could get a capital partner.
You could also get a partner who has some strengths and strategic opportunity outside of Amazon. Bring them into the business to help you develop, say your e-commerce store, another sales channel, or advertising platform outside of Amazon to make your business more defensible.
[ Alternative No.9 ] – Click to skip to this section of the video.
Number nine: You can form strategic alliances with other businesses. And the way to do this is to think who has your customer before, during, and after they interact with you. This is a killer strategy. You can write down 10 ideas of who has your customer before, who has them during and who has the after and reach out to them.
Every business in the world wants to grow. So if you can help another business grow you can create a mutual alliance. That could be something interesting.
[ Alternative No.10 ] – Click to skip to this section of the video.
Number 10 will shock you! You may not believe it, that you can actually just do nothing. No one says you have to do anything with your business. You don’t have to sell. You don’t have to grow. You don’t have to do anything. You can just let it run. So that’s an alternative to selling your business.
[ Alternative No.11 ] – Click to skip to this section of the video.
Number 11: You could look at offline opportunities. If you’re in the worldwide e-commerce space, you might be surprised to learn it’s only about 20% of all retail sales worldwide. So 80% of the revenue that you could be making is outside, offline.
So who is selling to your customer offline and how are they doing it? So go and look for that. Where are they selling them? How are they getting to the customer?
[ Alternative No.12 ] – Click to skip to this section of the video.
And lastly number 12: Go and meet your customer where they are. So get offline, get off the beach. Go talk to your customers where they are in the real world.
So there you go! 12 alternatives to selling a business. I hope you found this article interesting.