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What could my business be worth?

In this economy, and not using a broker (because they demand too much for the size of my business) what is a fair ballpark multiple for my business?

Online retailer 5 years in business. I've outsourced shipping to a fulfillment warehouse, and phone answering to a call center. Owner only needs to spend literally 20 minutes a day to maintain it, and maybe an hour or 2 a day to grow it. 2012 projected owner income (salary plus profit) $101,832.

The business value in my opinion should be more than a standard business, because it practically runs itself and can be owned by anyone in any location in the world. Shipping is done from LA, and calls answered in Denver. I live in neither city. I spend 2 days a week working for about an hour a day to take care of issues.

I met a broker but he didn't impress me and didn't specialize in online businesses. He also said he'd take at least $30k. Umm.. No thanks. I'd rather take my time and find a buyer if POSSIBLE without a broker.

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Answers (4)
William A. Price
Business Lawyer
DuPage County, IL

The value you will be able to obtain depends on what kind of buyer you can attract, and will probably be in the range of 2-5 times net profit, however that is calculated by your buyer(s). PrattStats and other databases (including BizBuySell's own figures) for recent sales trends for businesses in your industry can provide a basis for estimate of multiples that are current.

The high end of this range would be from a "strategic" -- a buyer that has a business yours could significantly improve, so profits from more than your site's direct sales would be countable in the "profit to buyer" equation. Look for your competitors and others in related industries as potential strategics.

Hope this helps,

Bill Price

William A. Price
Attorney at Law

Nov 5, 2011
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As a buyer,with strong cash read for a business.let me give my side.
Why in the world would you try and sell a business such a low owner participation hours required and high return for the small hours?
If you spend 2 days a week and couple hours for those days to clear 100k your going to have to look pretty hard to find something better,and again that what a buyer is going to think and wonder if it really does do those numbers and why would someone sell it it.

Oct 13, 2011
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The BAF Group LLC

Kyle, I agree with the prior writer in saying no Buyer is going to pay a premium on a "maybe", which is what projected income is. Most Buyers want at least three (3) years of financial history, and then the price is normally predicated on weighted averages of those combined years. That way, the Buyer can judge whether this is a whim or a concrete investment opportunity. Many restaurants do well in the first year, simply out of curiosity. But they also prediminately fail in the eighteenth month, after the excitement and that curiosity is gone. And unless you want to hold a note, your garden-variety Lender is going to demand three (3) years of growth-oriented earnings demonstrated by signed Tax Returns, before they will consider lending on something like an Online business.

On the subject of Brokers - and I am one - the fact that you met A Broker and he did not impress you, is an horrendous way to judge people. ANY people. A lot of people may feel the same way about Online Retailers, because they had a bad experience with companies like rip-off operations such as Kaching Kaching - but that really would be unfair to you, wouldn't it?

We get about 80% of our business from past Buyers and Sellers, as well as their Attorneys and Accountants who have felt we did a valuable service for them. That kind of satisfaction level is hard to beat, in any business. Yes, there are some less experienced Brokers out there that hurt our image; and there are some outstandingly rotten Brokers out there. just as there are some horrible Doctors, Plumbers, Mechanics, etc...

Good luck. No sarcasm intended: I mean that sincerely.

Oct 13, 2011
Buy-a- Company

A buyer is not going to base their pricing decision based on your 2012 projections. What is the business earning NOW?

Having sold my own companies in the past using brokers, I share your thoughts about their value.

Oct 13, 2011

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