Are you interested in selling your Amazon business at some point in the future? Then it’s essential to set it up for an exit, which increases its value. However, implementing these strategic decisions early on is far easier than a few months before the sale.
You’ll see in this article that setting up your Amazon business for an Exit also aligns with solid business principles you should be following anyway. Hence, you can think of these tips as a way of improving various aspects of your business.
Amazon is a $513 billion business and you can increase your piece of the pie by making the right adjustments.
Documentation and Transactions
You’ll need to show potential buyers documentation to verify your business. It’s far easier if such documentation is organized and on-hand when requested. Otherwise, you’ll run the risk of looking like an amateur.
Furthermore, if there are missing documents, then it might look suspicious to potential buyers. It doesn’t shine a good light on your business, and potential buyers might choose other businesses if they cannot verify certain information.
Diversification
To increase the value of your Amazon business, you’ll need to diversify various aspects of it. Here’s a few strategies for diversifying your business:
- Extra marketplaces: increasing the number of Amazon marketplaces in your portfolio make it look like a better prospect for potential buyers. That’s because if sales in one marketplace grind to a halt, then the business can continue functioning.
- More products: it’s better if a business has 10 products selling $10,000 per month in revenue, than 1 product selling $100,000. That’s because having a business with more products is safer in the eyes of potential buyers.
- Marketing channels: if you can drive traffic to your products with multiple marketing channels, then it indicates that you can rely on a steady stream of new customers. Some of the more popular marketing channels for Amazon include SEO, PPC, and email marketing.
- Product categories: selling in multiple product categories is another form of diversification you should consider during product research. That’s because a specific product category might become obsolete, so putting all your eggs in one basket might be unwise.
- E-commerce platforms: you can branch out your Amazon business to other e-commerce platforms like Shopify, Etsy, eBay, Walmart, and much more. You can also use Amazon’s FBA services to sell on other marketplaces, which makes logistics far easier.
Setup a Reliable Supply Chain
You’ll need to develop relationships with good quality suppliers to ensure your Amazon business stands on solid ground. The longer the relationship the better, and potential Amazon buyers will be interested to learn about the details of your suppliers.
Therefore, you should make sure to choose the best suppliers for your business. For example, choosing a manufacturer over a trading company is a better choice because the former can accept modification requests.
Also, you should have backup suppliers that new business owners can rely on if the primary ones are no longer in business. This takes extra research, but a step worth taking.
Improve Product Profitability
Before selling your business, make sure that you can make one final push to optimize profitability. After all, your business is sold based on performance, and with that thought in mind, here’s a few strategies for increasing your business profit:
- Negotiate with suppliers: take the time to contact your suppliers and get better prices. Even if it’s just by a few cents, you could nudge the profitability in the right direction.
- Shipping: evaluate your shipping options to come up with the best choice. For example, you can reduce your air freight and opt for sea shipping, which is cheaper. Alternatively, you can opt for a different freight forwarder to find better rates.
- Increase prices: one of the most obvious easy to increase profitability is to increase your product prices. However, make sure you do market research to ensure you don’t increase them so high that customers begin buying from the competition.
- Remove poor performers: you should look at your roster of products and potentially remove ones that are not profitable. This will increase the overall profitability of your business and make it a more attractive proposition for Amazon business buyers.
- PPC: Amazon PPC costs are one of the biggest ongoing expenses that you must get control over to increase profitability. You could take a closer look at your PPC campaigns to remove keywords that aren’t adding to the sales total.
Improve Business Financial Health
Do you have any debts, loans, or other financial liabilities that might be Amazon business buyers off? You need to take a good look at the numbers of businesses to figure out if there is a way you can improve them.
It’s a good idea to contact your accountant, who can help you eliminate any questionable parts of your business. For example, if there is too much money tied up in stock that is slow-moving, perhaps they can prevent you from ordering more. Your business finances need to be sold, so that new business owners can have a smooth transition into the business.
Meet With Amazon Business Buyers
To get your Amazon business exit ready, you can meet with Amazon business buyers to see what concerns they might have. Even if you are not ready to sell right now, you can take a few meetings for educational purposes. Think of it as research to help you determine what you shouldn’t do when getting an Amazon business ready for an exit.
Final Thoughts
To summarize, setting up your business for an Amazon exit is the right move, no matter if you’re starting out or ready to get out of the business. Use the tips in this article to ensure you can get potential buyers interested and increase the value. Also, once you complete these steps, you’ll find that your Amazon business will be in the healthiest state possible.
Finally, getting your business ready for an exit is an ongoing process that never ends. You can always do something extra to ensure that you increase the sale price and get the best deal for your hard work.
