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Dan Little is with us talking through the exiting process of selling an Amazon business. What to consider when setting up the business, the accounts and sales data, making sure a structure exists, the sales process itself and what to expect.
First Business – 2014
- Started in Aug 2014
- Single product selling across 5 x European marketplaces
- Allowed Dan and Family to quit their day jobs
- Sold it in Apr 2016
Selling an Amazon Business
- Hadn’t thought about selling it – FBA High Rollers (Manny Coates) or FBA All Stars (Matt)
- Was talking about selling his business via Empire Flippers
- Shocked at 15% cut they wanted
- Started a 2nd Business with a Partner
- Had overlap with this new business which was now 3 products and twice the size of the previous
- Wanted to sell the first business to realise some cash from the business
Brokers take 15%
- Looked around and found other brokers, not just Empire Flippers
- They all seemed to be around the 15% mark
- Not wanting to go it alone, Dan went with them
Information you Provide
- On-boarding process
- Submit really basic form to get a feel for valuation
- Turnover, profit margin, costs, etc
- Got a multiple on your net profit earning each month
- You got your bottom line and the multiple on top
- Listed for a 28 multiple
- A bit more risky as it was a single product business
- Then they send you a spreadsheet to complete covering from the start of your sales
- On the new business they have automated this process step
For Sale Sign is up
- Once it’s on the marketplace
- They do a video of you the seller that asks questions through the numbers
- A really good idea to enable the answers to obvious questions to be done
- This removes questions from the closure call to speed up the closing
- Had 10 Calls then 2-3 people put offers in and closed
Selling Business No. 2
- Aimed at 3-5 years to sell the business
- One year before the sale, cut back on unnecessary subscriptions and costs
- More structured accounts a year before sale
- Made the process of selling so much easier
- Anything > $1,000 in a month had to be broken down by product and marketplace
- Things like showing FB ads costs per product
Empire Flippers again
- Used Empire Flippers again for this second business
- Had 4 x Products in European Market and 2 x Products in the US market
- Nov 2015 started and sold in Oct 2018 – almost 3 years
- All under 3 x brands and 50 variations and 20 x SKUs total
- So 3 x Brands, 6 x Products, 20 different variations across EU and US
Sales Profile
- Most prominent 70% Europe and 30% in US profit breakdown
- Started in Europe and then expanded into US
- Took products doing well in the UK and then moved them to US
- Really high earning products
- Some products were doing 100+ units per day
Product Launches
- Used the same approach to launches across the 15 x Launches
- Was FB ads to a landing page with an 80% discount coupon code send them via the storefront URL link and in 3 days you were ranked
- Then started using longer tail keywords and once reviews were on you’d use the shorter keywords
- Then tried ZonBlast and took 14 days and was very expensive
- Latest is Internal Amazon ads – sponsored products with some external Facebook traffic with 20-30% off
Learning from the Misses
- Out of 6 products, had 15 x Launches
- Everyone has hits and misses
- Had some infringement issues
- So avoided patent or trademark infringements
- Most products on ’trend’ will come up and drop down again
- A lot of Dan’s products. Started at 25-26% profit but in a down-tail on trend so cut these back
Sales Process for the Second Business
- Explained the hits and misses to the prospective buyers
- Took less than a month to sell the second business
- Q4 was coming and started talking in Sept and wanted to move it in October to capitalise on Q4 earnings
- Made a lot of sense for them to close early
- Dan was very organised and Empire Flippers had all the info
- It was a good business and straightforward to take over
The Exiting Arrangements
- When exiting you can get the payment up-front mainly for smaller businesses 100% up front or 14 days after, etc after payment held in Escrow
- Or another way is Earn out: Get a % up-front and then 2-3 payments over 6-12-18 months
- You want to get as much up-front and as short a period after to get the money into your pocket
Life After the Exit
- Started the next business 6m before exiting the second business to have the overlap
- Not an Amazon Business this time
- A software as a Service Business linked to Amazon
- It’s a tool to help sell businesses and exit
- The software takes all the Amazon sales data and arranges it into a structure to import into Xero
- There is other software that does a similar thing but was more complicated to setup and use
New Business – Software as a Service (SaaS)
