The Seven Foundations of Value

At Ecom Brokers, we created the Seven Foundations of Value. As any business owner knows, there are a lot of factors to consider when growing a business. But if you’re ultimately looking to sell your business for maximum value, there are seven key elements to keep in mind.

The 7 Keys to Growing a Valuable Business are:

• Timing
• Stability
• Documentation
• Defensibility
• Diversification
• Suppliers
• Efficiency

By focusing on these key areas, you can grow your business in a way that will make it sellable and valuable when exit time finally comes. Let’s look at each Foundation in turn…

(I’ve published an in-depth discussion of each of the seven aspects, check out The Seven Foundations of Value Mini-Series on YouTube here)

Timing

As any e-commerce entrepreneur knows, timing is everything when it comes to selling your business. If you’re too early to the game, you won’t fetch a high enough price. But if you wait too long, your growth will start to plateau and you’ll become less attractive to potential buyers. Instead, you want to sell when your business is still growing, but not quite maxed out. This leaves room for the buyer to experience more growth for themselves and tap into untapped opportunities, such as expanding to new international territories. So if you’re thinking of selling your e-commerce business, make sure the timing is right!

Stability

Most e-commerce entrepreneurs dream of one day selling their business for a tidy profit. But in order to make that happen, it’s important to create a stable business with low-risk attributes. That means choosing a favourable niche, implementing transferable systems, and steering clear of black-hat strategies. It can be tempting to take shortcuts in the early days of launching an e-commerce business, but those risks can come back to bite you when it’s time to sell. By building a stable business from the ground up, you’ll be in a much better position to attract buyers and get top dollar for your business. So next time you’re tempted to cut corners, think about the long-term stability of your e-commerce business. It just might be the best decision you ever make.

Documentation

If you’re thinking of selling your e-commerce business, the first thing you need to do is get your documentation in order. This refers to meticulous records of SOPs, financial records, accountancy reports, tax filings, IP certifications, and so forth. Having all this documentation in good order will not only make the sale process smoother, but it will also give potential buyers greater confidence in your business.

Of course, keeping on top of all this documentation can be a challenge in itself. But it’s essential if you want to get the best possible price for your business. So if you’re not already doing so, make documentation a top priority for your e-commerce business. It could make all the difference when it comes time to sell.

Defensibility

In today’s competitive e-commerce landscape, it’s more important than ever to have a strong brand presence. By definition, defensibility refers to the quality of being able to withstand attack or criticism. In the context of selling an e-commerce business, this means reducing the risk associated with the perception of your business as “just another ecom business.” A key way to achieve this is by building a legitimate brand that is protected by intellectual property (trademarks and patents). Additionally, cultivating a community of raving fans on social media and cultivating a strong subscription base for your newsletter are both excellent ways to increase defensibility. When it comes time to sell your e-commerce business, these elements will help you command a higher price and attract more interest from buyers.

Diversification

Anyone who’s ever played the stock market knows that diversification is key to minimizing risk. The same principle applies when selling an e-commerce business. By diversifying your revenue sources, you reduce the risk for a potential buyer. For example, if you have an omnichannel strategy in place that encompasses different marketplaces, social channels, and traffic sources, you hedge your bets against any one of those platforms going belly up. Similarly, shifting reliance away from just one or two SKUs lessens the chances that your business will take a hit if one of those products gets suspended. In short, diversification is the name of the game when it comes to selling an e-commerce business. By spreading your eggs across multiple baskets, you make your business a more attractive proposition – and increase your chances of closing a deal.

Suppliers

When you sell your e-commerce business, the partnership with your supplier is just as important as the partnership with your customers. Your potential buyer will want to know that they can rely on your supplier to deliver orders on time and to meet the highest standards of quality. They’ll also want to be confident that your supplier meets the most stringent safety, social, and environmental standards. By establishing a strong partnership with your supplier, you’re sending a message that you’re committed to excellence in every area of your business. And that’s a message that any potential buyer will be happy to hear.

Efficiency

Your business needs to be running like a well-oiled machine, and that means automating as many tasks as possible and outsourcing the rest. The more efficient your business is, the more attractive it will be to potential buyers.

There are a few key areas you should focus on when it comes to making your business more efficient. Automating your PPC campaigns, for example, can save you a ton of time and money. Inventory management is another area where automation can make a big difference. And if you’re not already using email flows or review software, implementing these tools can help streamline your operation and improve your customer service.

Of course, automating certain tasks is only half the battle. You also need to make sure your team is operating at peak efficiency. That’s why outsourcing day-to-day tasks such as customer service is so important. It frees up your team to focus on more important things, and it ensures that your customers are always getting the best possible service.

If you want to sell your e-commerce business for top dollar, efficiency is key. Focus on automating your operations and outsourcing your customer service, and you’ll be in good shape when it comes time to list your business for sale.

Conclusion

With so many factors to consider when growing a business, it can be difficult to know where to focus your efforts. But if you’re looking to sell your business for maximum value, the Seven Foundations of Value are a great place to start. We believe in the Seven Foundations of Value and that focusing on these key areas is critical for long-term success. So, as you run your business, keep the “Big Seven” top of mind- it could mean a more valuable exit down the road.

Ready to sell your business for the best possible price? Start by clicking the link below! No obligation, no hard sell. Just solid, professional advice.

For more actionable tips to help you prepare and execute your dream exit from your e-commerce business, subscribe to our YouTube channel below.