This Guest Post is by Nathan Nead
Selling Your Virtual Company: Three Things to Consider
Building an online empire on the spammy recesses of the web isn?t necessarily easy, but it can be. Building a quality turn-key operation, on the other hand, is almost always difficult and time-consuming. Many have succeeded wildly in building spam-laden affiliate businesses on the web. Many cases of half-baked affiliate networks include cheap outsourced tactics used by some of the world?s biggest companies. It begs the question: do such businesses really add value? Can you sell a business built on the backbone of hundreds of spam sites and get the same price multiple as you could have if you had focused on quality?
The answer is an emphatic ?no.? While there are a slew of online snake-oil sales people out there, there still are a handful of well-meaning entrepreneurs who are looking to build a business, not just a cash flow stream. Fortunately, corporate value can much more easily be extracted when it is inherent in everything your enterprise does, regardless of its size. Hence, for those who build value in their virtual companies, here are three things to consider in preparing for the end sell-out of your profitable company.
Build a Brand
Recent Google updates indicate a move toward giving more credence to brands. This means affiliate sites built on exact match domains and subdomains now have less power than the actual brands themselves, giving affiliates less of a boost.
Brands also allow you to build a following of loyal customers who?ll return and purchase from your business time and time again. This is extremely important when it comes time to sell out as your business will often be valued, at least in part, by retained customers loyal to your brand. While brands do this effectively, affiliates? brand-building performance is often lackluster. Fortunately there are large and successful brands in the realm of affiliate online networks. Just because you are an affiliate, doesn?t mean you are doomed to fail as a brand, it just means you will probably have a long way to go to build out your business.
Keep Track, Keep Records
So many entrepreneurs are successful because they focus on what really matters to their businesses. This is true whether you do business online or are a journeyman plumber. However, this usually means many loose ends are also left undone, including accounting, bookkeeping and site analytics data.
Keeping up-to-date on accounting records and site-specific traffic metrics will be vastly important in getting your business to sell for the highest ROI (Return On Investment) possible. Due diligence prior to your company?s sale often requires close sifting of the company data, including historical data trends. Getting over the hurdle of too many questions can be alleviated by keeping very detailed books right from the outset.
Build Transferrable Relationships
So much of what is done in business is based on relationships, whether you do business online or are a customer-facing company. For those who are able to do business effectively on the web, the relationships you make with vendors, suppliers and customers need to be transferrable to a new entity owner or manager. That means you?ll need to build a business on trust, but prepare those relationships for an eventual exit. It doesn?t mean treat the people lightly or less than professionally, but it often means preparing the individual users and partners for the time when an exit could take place. If you are the reason they do business with your company and it?s not something inherent in the company itself, then you may need to rethink your current business strategy.
In short: begin with the end in mind. If you are able to keep your eye on the present while planning for the future exit from your company you are not only bound to get the most out of the revenues you build today, but it will position your business for a much higher exit price when you eventually sell out?which could be sooner than you think.