Selling my ecommerce empire

college and business are too much

[JonR28]

I'm basically wondering how you go about selling an ecommerce site. For the last year i've been working hard leveraging a day job, school, and my own business. My website has taken off and does pretty well, but now I'm going to College and finding to time to ship my product and promote my website is going to be hard! The point is that I'd like to sell my business so I can focus on my studies.

I believe my business is worth a pretty good amount because of its unique product that could make anyone with time very rich. The problem is I don't know where to go to sell it. I've looked at bizbuyandsell and ebay and similar services but I'm not sure if I trust those or if there will be serious buyers.

Has anyone here ever sold a business or know how to go about doing it? Thanks so much.

[diamondgrl]

I have not bought or sold such a business so I cannot give you a lot of specifics, but I think you might want to lower your expectations about it being "worth a lot" because it could make someone rich with enough work.

Unless businesses get in a bidding war over you as a strategic acquisition (i.e. buying a critical piece of technology or business process or helping lock up a segment of the market), your business value will usually depend in large part on existing revenue, not potential value.

Even if your business value is mostly based on existing revenue, there are other possible factors that might goose up the price. For additional hypothetical value, potential acquirers should be asking not only how unique the product is (as you describe it) but what the market size is and what the barriers to entry are for other possible businesses (i.e. you have put in years of writing code which would require competitors a lot of money to replicate or you own the only known quarry for the unique rock you sell or you have the patent). The latter is a particular hurdle for most e-businesses since they don't do anything that could not be repeated by others rather quickly. You may genuinely be different but you need to be realistic about making a good solid business case why you should be worth something.

[Macro]

FWIW, businesses selling for under $1,000 don't need to provide too much info to achieve a transfer. As you go up in price you'll find that it's more and more the case that you are required to provide detailed info. You would start with a full sales brochure providing most of the details a potential buyer would want. You'd start with earnings and provide a breakdown of how much the site is taking, how much is paid out, and what the net figures are. You'd provide history for those earnings. You'd provide cost of sales/advertising costs. You'd also disclose the volume of traffic you're getting ...and other site stats.

I'll give you one shortcut. You could spend years buying and selling sites before fully appreciating this. But I'll give it to you for free :)..... buyers want to know what's in it for them. Obviously. But when spending a lot of money they want guarantees of profits. Not just an opinion that the idea is unique and that it will make them rich. They want to see historical earnings. There's no guarantee like historical earnings (and even that's no guarantee). But what of new sites without history? Hmm. You'll find that buyers don't accept "new" as an excuse for no earnings history. If you want a good price you'll have to prove the site can earn a lot. As simple as that. Sounds stupid. But you'll find that that's the only thing that will get buyers to bite at the higher prices.

[JonR28]

Thanks for all the great information. Maybe I'll try and keep the biz till after the holiday season. I understand that investors don't usually buy into "potential" no matter how obvious it is.

[Freedom]

Trying to sell a website these days? Good luck. Seems like a lot of "profitable" webmasters are trying to sell out.

The truth is, there are no good websites on the internet for website/ebusiness buyers and sellers to come together.

[Macro]

JonR28, study the market, see what other sites are doing, what's selling, what's not. When a site/business has sold have another look at it's Sales Memorandum. What appeals in there? Try to find similar businesses to yours to see what they sell for. And why. Arm yourself for when you are ready to go to market. And Good Luck.

[peterdaly]

I checked out your web site. Thanks for the sticky. I have another suggestion. Take the next step. Hire an employee or two part time. Pay them to run your business for you. Going away to school? You are about to be surrounded by broke students who may make a great labor pool.

If you're business is going as well as you let on, you should be able to afford this within your business model. If your business model can't afford this--who would want to buy the company? Why buy a job when I can get one for free?

Your short terms goal should be to completely isolate yourself from day to day operations, while still (hopefully) have some profit left once everything is said and done.

Work on your business, not in your business. You've got what sounds like a great thing going.

[diamondgrl]

Just noticed your URL. After review, I would say you have a potential market there and a good clean site. I would also say you have a potentially fun business there (mine is good but doesn't have sex-appeal like yours). Those are the positives.

What you don't have, I think, is the potential for a very large business. It's definitely niche and while I would say your products are unique, let's face it, you do have thousands upon thousands of competitors and there are very very low barriers to entry - in fact my wife is thinking of starting a similar (but don't worry, not head-to-head) business.

I don't mean to pooh-pooh your idea because done right, it can definitely be a business that pays the rent or mortgage and gives you your independence, especially if you explore other outlets for sales of these items (established stores, other web sites, etc). And that's good.

But I think when you sell the business, you have to base the sale price largely on existing profits and not count a lot on much pricing of intangibles.

[pdivi]

I'm often searching for web businesses and there are 5 or 6 forum sites I frequent where webmasters post sites for sale. Google and ye shall find.

I'm not a big fan of Ebay and BizBuySell -- too much clutter on the former and too many brokers & crazy valuations on the latter. Maybe those sites work better on the seller side.

Like people here are saying, your business will be evaluated on its historical performance....primarily profit. If you want a rough rule of thumb on value for ecommerce businesses, start with a base of 1-1.5x annual profit and nudge up or down based on other factors such as organic traffic, growth rate, unique supplier relationships, original products, etc.

[Macro]

JonR28, I didn't want to quote the 1 - 1.5 x (based on what your expectations were you would have thought I was joking). But those are fair figures. Some very goods sites go for as little as 0.5 x annual profit (NOT turnover)... and these are sites which have taken some effort and skill to develop.