How To Sell A Community-Based Business
Ever wondered if you could sell a community-based business for a life-changing sum? Spoiler alert: you can. But here's the reality—most community founders hit roadblocks when they try. Why? Because building a strong community is only half the journey; preparing it to be sellable and attractive to buyers requires a different set of strategies.
In this article, I'll walk you through eight essential steps, all drawn from interviews with founders who sold their communities for seven figures. These steps show you how to increase your community’s value, attract the right buyers, and ensure a seamless handover while preserving the unique essence you've built.
Let’s dive in.
What’s A Community-Based Business Model?
A community-based business model builds loyal groups around shared values. Unlike transaction-focused models, it prioritizes relationships and belonging. Members engage through feedback, discussions, and events, creating mutual value through personal growth and connection. These businesses generate revenue through memberships, events, and premium offerings.
8 Steps To Sell A Community-Based Business
Building a community is a feat in itself, but selling it successfully takes strategy. Here’s a step-by-step approach to prepare your community-driven business for an exit that aligns with your freedom and lifestyle goals:
Build a Strong, Engaged Community
Diversify Revenue Streams
Establish Clear Value Propositions
Maintain Financial Health and Transparency
Foster Strategic Partnerships
Prepare for Cultural Integration
Seek the Right Buyer
Plan for Post-Sale Transition
Below, I’ll break down each of these steps, sharing insights and actionable advice to help you shape your community for a successful, high-value exit.
Step 1. Build a Strong, Engaged Community
A highly engaged community is the core value driver to sell a community-based business. Business buyers are looking for more than just follower counts; they want a vibrant, loyal membership that actively engages, participates, and supports each other.
Case Study: Bump Club & Beyond, which sold for seven figures, built a community of over 130,000 email subscribers through live events, social media engagement, and partnerships with relevant brands. They focused on cultivating a sense of belonging among their members, which created lasting value and made the community a worthwhile investment for the buyer.
Action Tip: Focus on creating valuable content, hosting events, and building personal connections. Strong engagement signals value to potential buyers, as it implies loyalty and long-term retention.
Extra Resource: How Much Can You Sell Your Business For
Step 2. Diversify Revenue Streams
Relying on a single revenue stream makes any business vulnerable. Buyers are far more interested in a community business with multiple revenue sources because it spreads risk and promises stability.
Example: Mind the Product, a community for product managers, did this by expanding beyond meetups into conferences, workshops, and training sessions. Diversifying their subscription business model not only increased their revenue but also made them a more attractive acquisition target for buyers interested in multi-faceted income streams.
Action Tip: Evaluate how you can introduce new revenue streams that align with your community’s needs. Consider options like sponsorships, online courses, or merchandise sales. The goal is to build a stable, predictable and diversified revenue flow.
Step 3. Establish Clear Value Propositions
Your community’s unique benefits should be crystal clear. A business buyers will want to know why your members are in the community and what value they gain from being part of it.
Example: 81cents, a negotiation support community, clearly differentiated itself by focusing on helping underrepresented employees secure higher salaries. This clear, niche positioning attracted Rora, a salary negotiation coaching company, who valued 81cents’ specific offering and trusted it would retain members post-acquisition.
Action Tip: Articulate your community’s unique strengths. Ask yourself: What problem does this community solve? What specific benefits do members gain here that they can’t get elsewhere? A defined value proposition builds buyer confidence in the community’s sustainability.
Step 4. Maintain Financial Health and Transparency
Financial health and profitability are the backbones of any successful sale. A solid financial record proves that your community business is stable, profitable, and ready for a seamless transition.
Case Study: Freelance Writers Den, a membership site for freelance writers, achieved a mid-six-figure sale thanks to its steady, reliable income. By maintaining clean, transparent financials, they made the acquisition process smooth and attractive to their buyer.
Action Tip: Keep meticulous records of revenue, expenses, and membership trends. Transparency is key—prepare detailed reports that a buyer can easily assess. This will show buyers that your community business is professionally managed and financially sound.
Step 5. Foster Strategic Partnerships
Strategic partnerships can amplify your community’s value by increasing reach, credibility, and resources. They’re also a major value-add in the eyes of a buyer.
Example: Foodboro, a community for food entrepreneurs, leveraged partnerships with industry stakeholders, which bolstered its offerings and ultimately attracted Sylva, a company specializing in niche communities. These partnerships added depth to the community, making it a more attractive investment.
Action Tip: Identify potential partners whose values and audience align with yours. Establish formal collaborations, such as content exchanges, joint events, or discount programs. Strategic partnerships enhance your community’s perceived value and add a layer of stability and growth potential.
Step 6. Prepare for Cultural Integration
When selling your community, cultural compatibility with the buyer’s company is crucial. If the new ownership doesn’t align with the existing community culture, members may disengage or leave.
Example: OwnTrail, a storytelling community for women, emphasized authenticity and supportive connections. They found cultural alignment with Teal, a career growth platform with similar values. This synergy ensured a smooth transition without losing members.
Action Tip: As you prepare for the sale, identify buyers who share your community’s values. During discussions, ask questions about their vision for the community post-sale. A culturally aligned buyer will respect your community’s spirit, making the transition smoother.
Step 7. Seek the Right Buyer
Selling to the right buyer can make all the difference between a thriving community post-sale and one that quickly fades. Look for a buyer who understands and appreciates your community’s unique mission and members.
Case Study: Mind the Product chose Pendo, a company with a strong focus on user experience and product management, as their buyer. This fit ensured that the community’s purpose and activities would be enhanced rather than altered, protecting the community's integrity.
Action Tip: Don’t rush the sale. Vet potential buyers carefully and look beyond the offer amount. Ask yourself: Will this buyer nurture the community I’ve built? A buyer who’s genuinely invested in your community’s mission will offer a smoother transition and long-term stability.
Extra Resource: 3 Key Books for Selling Your Small Business Successfully
Step 8. Plan for Post-Sale Transition
A well-thought-out post-sale plan helps ensure your community remains strong under new ownership. This phase is also where you may play a role in guiding the new buyer, either temporarily or as an ongoing advisor.
Example: Traffic Think Tank, an SEO community, involved its founders in the post-sale period to help the new owners manage the community and keep its direction intact. This collaboration allowed for continuity and reassured members during the transition.
Action Tip: Work with the buyer to create a transition plan that includes clear responsibilities and timelines. Consider a consulting role to support the community post-sale. This handover period can smooth out initial bumps and maintain trust within the community.
Extra Resource: How To Help Your Team Thrive After You Exit
Assess How You Can Sell A Community-Based Business
Ready to see how close to a successful exit you are as the founder of a community-driven business? Here’s a challenge to help you evaluate your community’s readiness:
Engagement Check: List the top five ways you actively engage with your members. Could each of these methods continue to thrive without your personal involvement?
Revenue Health: Review your revenue streams. Do you have multiple income sources, or do you rely on just one? Identify one new revenue idea to introduce this year.
Cultural Alignment: Consider what values are at the core of your community. Write down three potential types of buyers who align with these values.
Transition Plan: Draft a rough post-sale plan. What roles could you play in the handover to ensure continuity?
Timing The Exit: When Should I Sell My Business?
By completing this assessment, you’ll gain insight into areas that may need improvement before you sell a community-based business. Taking these steps now can lead to a smoother, more profitable exit when the time is right.
