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Selling your online business is a big decision to make and not one to be made lightly. There are lots of factors that you need to consider when you sell your online business. Not only do you have to worry about its valuation, but you should also take into account the timing of the sale and what you plan to do after you have sold it. Selling an online business generally follows the same structure that selling a brick and mortar business would, but a few aspects are different. You may not have to worry about transferring your lease or selling your business premises, and you may measure your business success differently. This article will cover things you should know about and consider when selling your online business.

Evaluate Your Business

To ensure that you sell your online business for its highest value, you need to take all steps to ensure that it is ready to be sold. Buyers want a business with lower risks and high rewards, so you should make sure that your business is as close to that as possible before you sell. This means picking the optimum time to put your business on the market and identifying areas to improve that make your business the most attractive to potential buyers. This could entail:

  • cleaning up your online presence;
  • renewing your website domain name;
  • organising your online store;
  • making sure your website’s terms and conditions and privacy policy are fit for purpose; 
  • increasing your search engine optimisation (SEO) efficiency; and
  • checking your website’s security systems.

Prepare Your Business Plan

If you do not have one already, you should draw up a business plan for your business’s current position, and how you expect it to grow in the future. Buyers will likely ask for a plan to get a comprehensive view of how profitable your business will be for them.

For example, you could model potential business success using the statistics from your website traffic to show your business’s popularity and how that translates to your business income.

Your plan will include how your business works, your business goals, and how you achieve them. This may not be immediately clear with an online business. For example, do you make your money through selling products online, or from advertising? Your plan should also show your business’s management and organisation structures.

Financial and Legal Matters

It is essential to be aware of your legal and tax obligations when selling a business. In New Zealand, there is no capital gains tax so you will not be taxed on profits you make selling your business. You may, however, have other tax and reporting obligations depending on the structure of the business you are selling.

For example, if you are:

  • a sole trader selling your assets, GST may apply; or 
  • selling the shares of your company, you need to let the Companies Office know.

It is a good idea to contact a tax or legal professional to ensure that the sale goes smoothly. They can also help you make sure your business is in the best legal position and will help you deal with any outstanding legal issues, such as:

  • making sure you own all assets on your balance sheet;
  • clearing security interests on the PPSR;
  • protecting your intellectual property, such as your website brands; and
  • locking in business contracts with advertisers and web developers.

Information for Buyer

Once you have prepared your business for sale and tied up any outstanding financial and legal matters, you should draw up an information memorandum. This would contain the information that you want a potential buyer to know about your business. Your business plan would be a part of this, as well as past financial reports and forecasts. It would also show your online business performance, which you can verify using your website analytics. You may want to detail how this translates into your online marketing strategy, and how well brings in potential customers.

For example, you may generate your traffic through social media, so you could outline your marketing process for a buyer to see how and why this works for your business.

You also need to consider what information you want to keep confidential, such as information about your customers. 

Finding a Business Broker

Finding buyers and negotiating the sale process is complex and requires specialist knowledge. It is, therefore, a good idea to find a broker to facilitate the sale for you. They can help you decide what information to share with potential buyers and provide a valuation for your business. They will also help you get a clear idea of what kind of buyers you are looking for and the people you want to attract.

Key Takeaways

Selling your business is a big step to take, so you should be clear about why you want to do so, and what you plan to do afterwards. You need to make sure that your business is ready for the sale and tie up any loose ends before selling it. It is a complicated and time-consuming process, so it is a good idea to hire professional help to make sure your interests are protected, and you can get the best value for your business. If you would like more information or help to sell your online business, contact LegalVision’s online business lawyers on 0800 005 570 or fill out the form on this page.

FAQs

How do I sell my online business?

To sell your business, you should make sure that it is ready to sell first. This means tying up any loose ends, as well as drawing up a business plan for potential buyers. You should also complete any ongoing financial or legal matters, then find a broker to sell your business.

Should I sell my online business?

Whether you decide to sell your business depends on your unique situation and how your business is doing. You may decide that it is time to move on to something else, or perhaps your business is at a perfect point to be sold. Either way, it is a big decision to make so you should consider all of your potential options.

Will capital gains tax apply when I sell my online business?

New Zealand does not have capital gains tax, so you do not need to worry about it when selling your business. But, you may have other tax obligations, like GST.

Do I need a broker to sell my online business?

You do not necessarily need a broker to sell your business, but it is generally a good idea to hire one. They can help you determine the appropriate value of your business, and find buyers as well.

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