Lessons I Learned from Selling My Web Design Agency
I sold my small web design business so that I could focus on my startup, Informly.
If you’re providing web design services as a solo freelancer, or are the founder of a web design agency with several employees, selling your business might be the farthest thing from your mind right now.
Perhaps you have never thought about it simply because you might not have realized that selling your business was even a possibility.
Maybe you are too attached to your company to even consider selling it to someone else.
Or the case may be that you have some fears about the things selling a business might entail.
You might want to get out of the web design business entirely, but are worried of the loss of income that might follow if you leave the industry behind.
Those are some of the things that might be holding you back from letting go.
However, it’s always good to think about your options.
Let me tell you the lessons I have acquired from selling my web design business, in case you are considering of doing the same thing. It’s not my first and only experience either, I’ve had other experiences in the area of buying and selling web design businesses prior to the sale of my own.
Lesson 1: You Don’t Have to Be Big or Well-Known to Sell Your Business
One of the biggest misconceptions I see people possessing, whenever the topic of selling a company to another is brought up, is that the company being sold has to be big and famous.
In my mind, that misconception comes from the fact that business brokers and tech journalists tend to talk more about the acquisition of a large, popular company by another larger, more popular company; so many of us end up thinking that acquisitions of small- and medium-sized businesses don’t happen.
In reality, there are loads of smaller acquisitions going on all the time. Like my web design business for example. It’s just that these business transactions usually don’t happen with as high a profile as, say, Yahoo! buying Tumblr.
These sorts of little transactions go on all the time because there are a lot of people who start a web design business and can’t make it work.
There are also many web design agencies looking for more clients, assets, and employees — and so one of the ways they can expand is through the purchase of a smaller web design company.
My web design agency wasn’t big. Not Tumblr big, anyways. Yet, I was still able to sell it.
Lesson 2: You Don’t Have to be Profitable
Many people think that you need to work your way up to being a profitable company in order for it to be appealing to a buyer.
That was not the case with my web design business.
In my experience, when larger web design companies buy smaller ones, more often than not, they are looking for something more than just profitability.
Web design companies and entrepreneurs are looking for signs of opportunities that the company they are looking to buy will grow if they take it over.
Lesson 3: Opportunity and Potential Are Important to Buyers
If you have terrible business processes, expensive employees, undercharged clients, a lot of overhead, etc. your profits won’t be great.
But another entrepreneur might look at that scenario and see opportunities. Opportunities to reduce waste. Opportunities to improve business processes. Opportunities for optimization.
Entrepreneurs, by nature, are people who see opportunities in things that other people are not able to.
It’s like flipping houses in the real estate business. For example, I see that in the area where I live in, houses are bought at a very low price, renovated by the new owner, and then sold at a much higher rate.
Everyone wants to buy a company with potential.
Lesson 4: Upward Trends Are Important
Prospective buyers want to see metrics going up.
When I sold my web design agency, my site traffic had doubled in its last 6 months.
Recurring revenue was going up. The number of clients was going up.
Even if you aren’t profitable, as long as important metrics exhibit upward trends, buyers will see opportunity and potential.
If your profits are good, but your trend is flat or going down, that is a big problem.
Lesson 5: Your List of Clients Will Help You Sell the Business
The biggest problem for web design companies is finding good clients.
If you have a list of good clients regardless of whether your business is profitable or not, this is going to be appealing to a web design agency buyer.
Even better than having a good set of clients is having clients that have recurring arrangements with your business. These recurring arrangements might include monthly website maintenance fees or web design service retainer agreements.
I had my existing clients on support agreements.
I also sent them an email each month with stats about their websites (which, by the way, was the inspiration behind Informly, my startup).
I was hosting most of my clients’ websites.
In the end, the main reason I was able to sell my web design business was that I had good clients who brought in recurring revenue into my business each month.
Lesson 6: Some of Your Assets Aren’t as Obvious as They Seem
What do you have within your business that could be appealing to a buyer? These assets might not be readily apparent.
In my case, one of my assets was actually my company’s web design blog. The blog ranked #1 in Australia for the search term "website design" and #3 for the term "web design". The blog was bringing in 1 lead a day to my business, on average.
My web design blog had a lot of value to someone who wanted web design leads.
They would have had to pay Google thousands of dollars a year through the AdSense platform to get the same amount of traffic for those keywords, so there was clear value in buying something that’s going to provide them ongoing benefits for free.
You might have something completely unrelated to your web design business that would be an asset to someone else. Look for those not-so-obvious assets and use them to help you sell your web design agency.
Lesson 7: Being a Small, Personal Business Isn’t a Deal-breaker
I used to give a lot of advice to small business owners. One of the things I would always say was "be as personal as you can in your business."
That means using your personal name, having pictures of yourself on your website, having transactional emails coming from your own personal email address instead of a robot like email@example.com, and so forth.
The advice about being as personal as you can is very different from what I see a lot of small businesses actually do.
What I see more of is that small businesses try to be more distant from their customers and more "corporate"-looking, to appear bigger than what they really are.
Often when I’d tell people their websites should be personalized, I would be met with criticism. A lot of people think that in order for something to be valuable, it needs to be some sort of impersonal machine, because being impersonal implies that the company is too big and too busy to have its founders and employees directly interacting with their customers.
I couldn’t have possibly been more personalized in my business.
I had a blog where all posts were by me.
I had loads of face-to-camera videos.
My face was all over the site of my web design company, including right at the start of the homepage in a big welcome message.
All of my clients dealt with me personally as the first port of call for almost everything.
When it came to selling my web design company, being small and being personal didn’t get in the way.
In other words, other companies who want to buy up web design businesses aren’t looking for some huge corporation — they’re completely happy acquiring small, personal companies like mine.
Whether you’re planning to sell your business or not, it’s good to at least consider these things for when you might have to do so, and also just to keep in mind that what you’re building might be worth more than you think it does to someone else.
If you have questions about the topic of selling a web design agency, please feel free to start a discussion in the comments below.
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About the Author
This was published on Jun 10, 2013