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Can I sell an adult business with no revenue at the moment but with a lot of revenue potential?

The website receives approximately 4,500 visitors a month. Mostly Unique visitors. It has a dating service, e-commerce, blog, chat, and other features installed. It is also search engine friendly and has been optimized. It is currently receiving high rankings on Yahoo and Google as well as in other search engines. Its only been live since approximately late Dec. 2008.

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Small Business Underwriters

I agree with Peter. Million Dollar ideas are everywhere. Look at it this way...would YOU pay for a business with "potential"? The reason people pay a premium for businesses is that the hard work has already been done, and the business generates cash flow. If a business doesn't generate cash flow, why would someone pay money for it? They can keep their cash, and start their own business that has has no cash flow.

Aug 4, 2009
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How to Buy a Business

Small businesses are valued and priced based on historical ODCF or SDE, not on some vague "potential."

Moreover, everyone and his Uncle Harry is trying to sell a website with nothing but "potential." Most are garbage, to put it bluntly.

The trouble is people, especially sellers of "no revenue" sites, have no idea what creates value in the marketplace. Hint: it's not the features built into the site.

Jul 17, 2009
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The BAF Group LLC

There are SOME slim ways to do that. Normally, NO ONE pays for potential: That is a death word in the business of brokerage. One of the few places this can be done is a Web Site. Key questions are: Why is it not now generating business? If not now, when? And why will it turn around? Do you have some special, intellectual property that accompanies this? If not, why should anyone bother with paying you? (That is not being cruel; it is an honest question a Buyer will have?)

The real key for any Buyer - whether the business is making money or not - is why should I pay money to buy this business? Why should I not start up my own business, like this one, and save the money? With a Web Site, the costs of developing the Site can be huge, or it can be tiny. If it is not making money, and the cost to duplicate the effort are relatively small, no one has any incentive to buy your business. But if the cost to duplicate are high, and there is reason to believe the business will make money soon, for concrete reasons, then it may be salable. But then the question is, for how much?

You would be much better off waiting and showing a profit. The Buyer is going to be suspicious when you try to sell on potential: "If the potential is so damned good, why is this guy giving it up? If there is no reason to believe it is going to happen soon, or if the business needs a lot more investment to bring it to a profit, you have a tremendous, uphill battle!

Jul 17, 2009

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