What is the value of my business?

What is my business worth? Similar to other investments the value of a business is linked to its ability to produce future profits. As a business owner you probably ask yourself this all the time. Some people are just curious what their business is worth, some need a formal valuation and some people are considering selling their business. Whatever the reason our calculator will help you do that.

What Makes A Business Valuable?

The amount a buyer is willing to pay for your business will all come down to two things, return-on-investment (ROI) and relative risk. The lower the risk, the higher the price and vice-versa. With that being said, what really makes your business worth more when selling is mitigating the risk of the business failing in the future by having the following characteristics associated with your online store:

• Predictable key drivers of new sales
• Stable or growing traffic from diversified sources
• Established suppliers with backup suppliers in place
• High percentage of repeat sales
• High percentage of repeat customers
• Clean legal history
• Brand with no trademark, copyright or legal concerns
• Documented systems and processes
• Growth potential

Valuation Methods

Traditional valuation methodology can be simplified down into three types of methods. They are:

1. Earnings multiple – A buyer applies a multiple, usually in the range of 1-3 (depending on the size of the business) and multiplies it by the annual profits. If you are working with monthly statistics, the multiple can be in the range of 12-36. Counter wise this can also be a multiple of revenue (total sales) for larger fast growing businesses. However for the average Internet business valued under $5 million, this is generally not used.


2. Comparable sales – The buyer may decide to find data on sites similar to yours that have sold in the past. This method is not necessarily accurate, but it creates a clear range within which your website should be sold.


3. Asset valuation – Some sellers, or buyers, prefer to look at a website’s value in terms of the assets tied to it. Assets can be traffic, quality of this traffic, a huge mailing list, a premium domain name, a recognizable brand name, or any other thing that can be leveraged to make bigger profits and achieve a quicker return on investment for the buyer. This is usually applied by strategic buyers for sites that are making little to no profit.

Where Can I Sell My Business?

• 1. - Broker - ($250k - $5m in profit businesses)

Medium sized businesses are best sold through brokers who help with selling your company. Best for businesses making between $250,000 and $5m in profit per year.

• 2. - Marketplaces - (under $250k profit businesses)

Smaller business and micro-businesses are usually best sold privately by the owner through forums or marketplace websites.

Larger businesses are best sold through investment banks or merger and acquisition companies.