How Do You Sell a Business or Side Gig that Makes $2K per Month?
7 years ago · 3 minute read
AMA question #8:
“You mentioned once to start a side gig, get it to profit 2k a month (for at least a year?) and then sell the business for like $50,000. How do you go about selling a business like that?”
Here’s our answer.
Key Points:
- Selling a side gig or small business is a lot different than launching or growing a business. So don’t feel unprepared.
- You can do this a few ways. First, a few tips.
- Ask, how important are you to the business?
- Second, get your financials and key stats in line. Write up 2 pages on the business.
- Here’s how to sell it:
- Business brokers
- Listing websites (see below)
Further Reading:
AMA Video Transcript
Dana Robinson: You mentioned once to start a side gig, get it to profit 2K a month for at least a year? And then sell the business for like 50K. How do you go about selling a business like that?
Nate Broughton: Good question, good question. And yes that is a good recipe for success, I think it’s a ripped out right from the Opt Out book or there abouts. I think that selling a business is very different than starting and running a business, so I think that’s why I think it’s a good question. It’s a totally different skill set, so I can understand why this is a question. But, I’ve got two tips of advice and before I throw those at there, I want to say if you’re going to sell your business you need to do a couple of things first. First, you need to think about how important you are to the operations of the business. Is this a side gig that you’re doing on the weekends, were you’re doing all the labor and it’s highly tied to your own personal relationships? That’s going to be a little bit harder to sell and that’s also going to drive down the valuation. So, think about how important you are to this. If this is a website that just kind of runs and does its own thing, that’s more sellable asset and you’re going to get a higher valuation.
Nate Broughton: The other thing about this is I think you need to bring everything together, like the statistics on what this business is. Can you provide for me in one to two pages in a quick narrative and then also like the stats, the key stats. How much money does it make? How consistent has it been? Some of these things are not really brought together for a lot of people that go to market to sell their business. So, if you can do those two things right first, you’re going to be in a good position.
Nate Broughton: Think through that and bring together a one to two pages about what this opportunity is. What else do we suggest?
Dana Robinson: Well, I think you’ve got to really ensure that the highest value you’re going to get for the business is, how much profit is it making and how much time do you have to spend on it? I think that if you’re mowing lawns and making two grand a month, you’ll probably only sell that business for three months of revenue, right? So, you might get six grand. If you’ve got a website that makes you two grand a month, you might get a lot more than $40 or $50,000 for that. Someone strategically might buy that and how do you find the buyer is really the real question.
Dana Robinson: So, let’s say you have a niche, you’re making $2,000 a month with a website that’s publishing content, making money on ads. You find your competitors, that’s a great way just approach the people who might want to buy you, that can leverage what you have and make more. They’re going to pay a higher price for it. And then, approach brokers, brokers will vary depending on whether it’s a local business or a web business.
Dana Robinson: So, we’ve got friends that run appbusinessbrokers.com, they just deal in apps and websites-
Nate Broughton: Yeah, they’re good examples, Latonas.com, Flippa Marketplace is where people list businesses for sale. Where people like us who buy these businesses are always looking for new opportunities that are popping up. So, that will get you in front of an audience of buyers pretty quickly, look for those marketplaces.
Nate Broughton: You mentioned brokers as well, we’re talking about business brokers. There are people in every locale in the country and also business brokers that specialize in certain types of businesses. So, just Google those, reach out to those people and you can kind of hire them on a commission only basis, for them to take your business and market it out on their website and their email list, to get your business sold.
Dana Robinson: Yeah. A lot of local realtors specialize in businesses too, so again, if you’re selling a localized business that’s service oriented. A local realtor who focuses on businesses might be the right way to go, because they’re going to list that in a local MLS directory, that you might not have access to and they’re going to try and make market for you and make a commission on it.