Welcome to Week One of our five-part guide series designed specifically to help those of you curious about selling your eComm business. This week we're talking about accessing money - sales, capital raises, and debt. 💰
Hello business owners & operators, and welcome to Week One of our five-part guide series, designed specifically to help those of you curious about selling your eComm business. After two years of negotiations, hundreds of conversations, four closed acquisitions, and millions in payouts to founders, we’re excited to share this valuable first-hand experience with business owners interested in the process.
This week, we’re going to help you start planning for your brand’s future by exploring accessing money. This can mean taking on an investment, leveraging debt, or selling your brand. Our goal is to first provide you with a base level understanding of the pros & cons of each option. From here, we’ll help you craft your best path forward.
Pattern’s CEO and Co-founder, Nick Ling, has this advice for readers,
‘As a business owner operating in today’s environment, it’s important to know the options your business has at all times. You never know when an opportunity will present itself, and you don’t want to be caught unprepared.
Knowing when and how to sell – or making a major business decision, is something we spend a lot of time working with founders to prepare for. The following is taken from real conversations and we hope it’s helpful to each business leader reading this.’
Let's get started!
eCommerce brand founders like you have many options when it comes to taking your business to the next level. Once your business has found product-market fit, you’ll find that there are a number of ways to facilitate the growth of your brand.
However, much of the decision-making surrounding which path to take depends uniquely on your circumstances, and what you are trying to optimize for. While life is about options, success is about knowing where to focus your time and energy.
In the table below, we lay out a variety of cash-based options for you. We list out the key things to consider for each option, to help you get a better sense of your best path forward.
The good news is, as you can see above, you have options. The challenge can then lie in understanding which path is best for you. This process is unique to each business owner, but here are some basic best practices.
The key here is knowing when the time is right. An ‘inflection moment’ in your business and/or your personal life usually signals the right time to consider a sale. You want to get your business to a place where another team can come in, take the foundation of your hard work, and sustain or grow it. That means your house has to be in order, and you have to also be at peace with letting someone else take the reins.
Because of this, finding the right partner is of the utmost importance. They’ll need to understand your motivations for starting the business and wanting to transition your role. In short, selling is the most certain way to see liquidity from your brand.
An Investment is a great fit if you are confident in your business’s trajectory, and you want to continue running and growing the business. This option is available for mature, larger brands and investors, and will normally set up control mechanisms for major strategic and financial decision making.
There are two paths here: securing a loan from a bank, or revenue-based financing. Taking on debt is usually aimed at helping you manage inventory. Your loan eligibility will be assessed based on your ability to pay the lender back over time.
Remember, you have to always pay back debt, so you want to make sure you are confident enough in your business’s future cash flow to be able to provide the capital you took in, plus interest, in the agreed upon time frame.
In any of the above scenarios, you will most likely have to align with an outside party on what your business is worth. This can be an initially challenging process, as it can feel hard to put a price on what you’ve built! However, the more knowledgeable you get on how different parties think of valuation, the more you can find the common ground that benefits your partner and ultimately serves your business.
We look forward to building upon this conversation with you next week. Contact us to learn how Pattern Brands can help you realize your unique vision and brand goals.
Onwards and upwards!
Pattern Brands 🏡