Throwback: Exit Like a Pro - Secrets to a Lucrative E-Commerce Sale

In this follow-up episode, host Josh welcomes back Scott Deetz, founder of The Northbound Group, to discuss strategies for successfully exiting an e-commerce business. Scott highlights common seller mistakes, such as poor risk mitigation, lack of transparency, and neglecting post-sale obligations. He emphasizes the importance of professional advisory support, staying involved after the sale to secure contingent payments, and planning thoughtfully for life after exit. Scott encourages entrepreneurs to leverage their experience to attract investor capital for future ventures, helping maximize exit value and ensure long-term success. Chapters: Introduction & Scott’s Background (00:00:00) Scott Deetz is reintroduced as the founder of The Northbound Group, with a focus on e-commerce and SaaS business exits. The Importance of a Proper Exit (00:01:06) Scott emphasizes that most of the financial reward comes at exit, not during business operations. Risk Mitigation Strategies (00:02:21) Discussion on identifying and mitigating risks, such as stock outages and maintaining business stability to maximize exit value. Transparency and Caring About the Brand’s Future (00:04:26) The need for transparency during the sale and caring about the brand’s ongoing success with the new owner. Managing Post-Sale Obligations & Deal Tracking (00:05:27) Importance of tracking post-sale obligations, contingent payments, and using a deal tracker to avoid costly mistakes. The Value of Professional Advisory Support (00:07:54) Why having an experienced advisory team is crucial for managing the complexities of a business sale. Staying Involved After the Sale (00:08:34) The benefits of remaining involved post-sale to ensure contingent payments and business success, and how this role can be less demanding. Mindset Shift: Long-Term Involvement (00:11:26) Encouragement to stay invested in the brand’s long-term success rather than immediately disengaging after the sale. Planning for Life After Exit (00:11:57) Advice on taking time to plan the next venture, leveraging new status and opportunities in the entrepreneurial community. Leveraging Investor Capital for Next Ventures (00:13:23) Encouragement to use investor capital, not just personal funds, for future ventures, and to consider new business directions. Summary & Final Advice (00:16:24) Recap of the 12 mistakes to avoid, urging listeners to proactively plan for exit and maximize business value. Contact Information & Closing (00:17:23) Scott shares how listeners can reach out for advice or support regarding business exits. Links and Mentions: Strategic Finance and Advisory  "Northbound Group": "00:00:00" Deal Management Tools  "Deal Tracker": "00:06:23" Contact Information  "Scott Deetz" on LinkedIn: "00:17:25" Transcript: Josh 00:00:00  Today I am super excited to introduce you all to Scott Deetz. We've already introduced him because he's been on the podcast previously, so he is our first part two guest that we've had. So you know, Scott, there's there's your award of the day already is, you're our first part two guest. but I am super excited. This is something we didn't have enough time in episode number one, and Scott has taken a lot of time to develop and actually prepared a presentation that he'll share with you guys today. about this kind of part two. But here's Scott's bio. Scott is the founder and CEO of The northbound Group, a leading strategic finance and corporate development and sell side M&A advisory firm focused on Amazon and e-commerce, physical goods and SaaS businesses. Northbound has more than 30 full time team members dedicated to the mission of helping ecommerce entrepreneurs achieve life changing events. So with that introduction, welcome to the show again, Scott Deetz. Scott 00:01:04  Hey, Josh, how you doing? Know, it's great to be back. Scott 00:01:06  And, this was a lot of fun for me to work with our team to put the content together. So I'm looking forward to sharing it and, and hearing your thoughts on it. And obviously, part of my own personal passion is I want to help every sell side entrepreneur, get what they deserve, for their businesses. As you said, you work years and years. and as I always like to say, you work years and years to build a company. But if you don't do the last step right of exiting that company, you're oftentimes leaving more than half of your money, you know, on the table because, for many physical goods and other sellers, the money they actually take home from their business is, the bulk of it comes more than 50% comes when you exit. Not the entire time that you're running the business because you're always reinvesting back in the business. So, real, really looking forward to sharing the content with you and everybody else and, and getting your feedback. Josh 00:01:59  Scott, do you have any specific examples that you might be able to share? That might be like what types of risks, right. Josh 00:02:06  We talked about Amazon account health risk. Right. That's one thing. We talked about not having your trademarks and things like that. But what are some of those other like risk factors that you feel like sellers could be actively trying to mitigate? Scott 00:02:21  Yeah. So I'll give two answers to that. One general and one specific. The general rule of thumb is that every new question a buyer has to ask when you explain your business to them, the price goes down. So you want to think about being able to explain everything upfront so they can see the whole package and see what it is. And I'll give you a great example of risk if you are thinking of exiting in 12 months from now, making sure that no matter what, you don't have any stock outages and you get the capital financing in place to show the run rate of the business while it has stock in place. Because every time there's a stock outage, a buyer has to ask the question, why did that happen? And it either happened because you didn't plan accordingly, or that this business is so up and down and volatile that it's going to be a lot to handle. Scott 00:03:16  So buyers love boring businesses. And so being able to show the ability, I kind of say that in jest, because everybody wants something that's kind of fun, but flashy and volatile is not what buyers are looking for. So if you just think about the risk of your business, demonstrating that you've been able to maintain a similar price for a longer period of time, demonstrating that you've been able to maintain a, a stock in inventory, demonstrating that you've been able to maintain rank. So the way to think about it is just to look at your PNL and look at what are the numbers that could change, that a buyer would be most afraid of them changing, and then designing a risk mitigation plan that shows them demonstrated evidence of why they don't need to fear those things. And that's in addition to all of the compliance things that we talked about before. But those are some specific examples of making sure to show that your business is not risky. And then also from an ownership standpoint, making sure that you have all of your, you know, documents in order, all of your suppliers are people that you've worked with that are reputable. Scott 00:04:25  those types of things. Josh 00:04:26  Awesome. Yeah. Scott, I think overall, like as we go through these mistakes, one thing I see a common pattern and trend of is that, look, when you're trying to exit your business, this isn't you saying for the most part, this isn'...

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