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If you’re struggling to keep up with the high demands of running your web design business, it might be time to sell. But without prior experience, the process can be a minefield to navigate, and there are lots of opportunities for error.
That’s why it’s important to identify the common pitfalls that arise when selling your design business – the culmination of years of hard work. Yes, you want to secure a fair price. But there are lots of other variables to consider, like timing, transparency, and confidentiality.
In this post, we’ll dive straight into eight mistakes to avoid when selling your web design business. Then, we’ll discuss the best way to hand over your company to the right buyer. Let’s jump in!
Eight mistakes when selling your web design business (and how to avoid them)
Here are eight of the most common pitfalls when it comes to selling a web design company. We’ve also provided some guidance on how to avoid these mistakes and complete a successful sale.
1. Underestimating your business’s value
One of the biggest mistakes that business owners make is letting the buyer set the price.
Yes, it’s natural for them to assess your company’s worth for themselves. But the most productive way to begin negotiations is to have your own idea of how much you expect to make on the sale. Without having a baseline in mind, it’s harder to recognize a fair offer.
Another problem is that many sellers put too much stock into factors like the size of the business and the return on investment (ROI). Sure, these will be key considerations during a valuation. But don’t undersell yourself if you have a small, less profitable web design business.
Perhaps you have a highly capable management team or a varied list of clients. Maybe your employees possess a specific type of expertise, or you serve a highly targeted market.
All of these things can give your web design business a competitive edge against more general-purpose companies. What buyers are looking for is potential, so we recommend finding your business’s unique selling point to discover its true value.
2. Waiting too long to sell your business
There are many reasons why you might want to sell your web design business. Maybe you run multiple companies and you’re more passionate about other projects.
Many business owners get weighed down with the responsibility and investment required, especially if they’re heavily involved in the day-to-day operations. That said, it can be tempting to take a less active role in the business and leave it as a form of passive income.
The problem here is that without proper time and attention, your company’s worth might decrease. For example, you may struggle to demonstrate recent high-quality work, impressive statistics, and a diverse client base when you do decide to sell.
The longer you leave this, the harder it is to get a good price for your web design business. Therefore, you need to think strategically about timing the sale.
Generally, it’s best to bow out on a high, when potential is still easy to envision. But naturally, you’ll need to consider other variables like your own corporate circumstances and the current market conditions.
3. Not being transparent
As you might expect, prospective buyers will trawl through your company with a fine-toothed comb. They’ll scrutinize your client base, retainer agreements, churn rate, your reputation, and much more.
That said, no one expects your business to be immune to hardship and obstacles. Everyone gets bad reviews. Everyone loses clients. The worst thing you can do in this scenario is fail to be upfront about the challenges you’ve faced.
Although it might feel as though you’re aiding the sale of your web design business, this information is more than likely to get exposed throughout the process. Depending on the severity of the discovery, it can have a significant impact on the agreed sale price.
To avoid this happening, it’s better to operate on an open-book policy. Be transparent about the credibility of your financial resources, your right to intellectual property (IP), and your use of outside designers, among other things.
4. Targeting the wrong buyer
Merges and acquisitions fail all the time. One of the main reasons for this is that people get so focused on the sale price, that they forget about other factors.
Of course, the purchase price is hugely important when selling your web design company. But you also need to consider your team members, clients, technology, resources, processes, and so much more.
While these things may have worked well within your business environment, they might not translate into a different one. This is especially likely if you’re thinking about selling to a company with a completely different structure and history from your own.
It can be difficult to determine, but we recommend trying to gauge whether the buyer offers conditions that enable your web design business to thrive. Will your clients be onboarded efficiently? Will employees be treated with care? Will intellectual property be handled responsibly?
5. Relying solely on web design services
The easiest way to increase the value of your web design business is to expand your offering. This way, you can show buyers that you’re able to appeal to a broader range of customers.
You don’t have to carry out these additional services personally. And, you don’t have to take a huge leap away from your web design specialism. Complementary services like web development, search engine optimization (SEO), and ongoing maintenance could be a good fit.
If your current team lacks the skills to handle these extra tasks, you can always outsource the work to freelancers. It will still look good when the time comes to showcase your portfolio and demonstrate the variety and scope of projects.
That said, if you’re certain you want to stick with web design services, there are a few extra options you could provide:
- Graphic design (particularly logos or icons)
- Web design consulting
- A/B split testing
- Website sitemap design
- Social media account creation
- Content creation and management
- Website management and/or hosting
- Internet marketing services
You might also consider adding a website redesign service, which can be a great way to retain existing clients and improve the web presence of new customers. Meanwhile, you could combine various service options to offer branding assistance to new or developing companies.
6. Failing to create products out of services
Although you sell web design services, it can be easier to market web design products. This means bundling different service options together to create neat packages that can be purchased for a set price.
You can still encourage potential clients to request a custom quote for particularly complex or large projects. But the best website design companies improve efficiency by providing a range of pre-defined design packages.
For example, you might offer set solutions for ecommerce sites, portfolio sites, real estate sites, and so on. Or, you might vary plans according to the number of services clients get access to.
In this case, you might have a basic web design package alongside premium options that include design add-ons (like we discussed in the previous section) such as social media accounts, sitemap design, etc. This can make your web design business more appealing to buyers since it shows that you deliver a consistent product.
7. Accepting the very first offer
There are times when it makes sense to quickly close on a deal. But you’ll want to remember that your web design company may be the culmination of years of sweat, blood, and tears.
We’re not telling you not to accept the first offer you get. We’re just saying that even though it may seem like a fair offer at the time, it isn’t likely to be the best one you’ll receive.
Selling your business ought to be a strategic process, with your negotiation and deliberation time mirroring the time and effort you’ve invested into building your company. If you’re not sure whether the offer is a good one, it’s best to seek advice and guidance from others.
This is a great time to utilize your industry contacts or leverage relationships with fellow business owners. But you can also go a step further and seek legal counsel, particularly mergers and acquisitions (M&A) advisors.
8. Mishandling confidentiality
We’ve talked about the fact that you’ll need to disclose information to prospective buyers, but it’s important to maintain confidentiality to protect your web design business. There’s a particularly high risk of confidentiality breaches if you try to sell your business to competitors.
This can lead to the misuse of company secrets. But with full knowledge of your business, competitors (as well as employees, suppliers, or clients), are more likely to make offers that are significantly lower than what you might hope to receive.
That’s why it’s useful to get a strategy in place (generally with the help of an experienced lawyer), to maintain confidentiality and avoid deal-breakers such as sensitive information leaks. For example, you might use a limited review team (or “clean team”) to carefully restrict access to certain kinds of information.
This way, you can ensure that information comes to light at the right time to impact value. At the very least, you should wait until a letter of intent has been accepted before releasing tax returns, financial statements, leases, suppliers, etc.
The best way to sell your web design business
All things considered, it’s important to find a buyer that enables a smooth transition for your clients and employees. Besides obtaining a fair price, it’s also ideal to choose a buyer who sees value in your business beyond just the size and revenue.
Some business owners prefer to use brokers or marketplaces, as it’s a convenient option. But with so much competition, it can be hard to make your unique proposal stand out, especially if you don’t occupy a specific niche.
Plus, the process can be very impersonal, and generally, the bigger design businesses tend to find more success across these spaces. Instead, it can be better to sell your web design business to an experienced agency like Freshy:
Freshy has a solid track record of successful acquisitions and mergers, and strongly believes in fair and transparent dealings. Besides offering an experienced web design team, Freshy also provides a range of other services including WordPress development, maintenance services, ongoing support, and more.
Freshy carries out efficient personalized onboarding experiences for your clients to ensure a smooth transition for everyone involved. There’s also a dedicated in-house support team that’s adept at cultivating productive personal relationships and making your clients feel valued.
Freshy isn’t just concerned about acquiring large, profitable web design businesses. It has a keen interest in acquiring a variety of companies with different client volumes, niches, and expertise.
And with over 14 years of experience, your design business couldn’t be in more capable hands. Better yet, you can start discussions today by filling out this simple form. A member of the leadership team will be in touch as soon as possible.
Conclusion
When it comes to selling your web design business, you’ll want to settle on a fair price. But it’s also important to ensure a smooth transition for your clients and employees. Plus, you don’t want to settle for lower offers.
Finding your company’s unique selling point and targeting the right buyer is crucial for a successful sale. You might also consider expanding your service list or packaging services as products to add value. Additionally, you’ll want to be transparent throughout negotiations while maintaining confidentiality.
Freshy is an experienced WordPress agency with a strong record of acquisitions and mergers. We’re interested in design businesses of all sizes, markets, and client volumes. Plus, we make sure that dealings go down efficiently, and we offer a tailored onboarding process for all your clients. Fill out this quick form to begin discussions today!
Featured image credit: Pexels.