Need Help Evaluate My Business

Jardini

Jardini

New member
Dec 13, 2007
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台北
I have been thinking about selling off my business lately so I can focus on projects that I am actually interested in.

However evaluating a business is really not my area of expertise, so I am trying to get your opinions to see how much this entire business is actually worth.

It is a supplement brand with two products only. Established in late 2009

It is not a freetrial, it is cost per sale with autoship being one of the options

It generates around 40k a month revenue (from both official site & Amazon) with net profit around 13k~16k really consistent (This is if I don't do any stupid traffic source testing such as trying out new keywords on adwords and etc) It has been like this for 3+ years. We actually hit 18k last month in profit

I know the number is probably really small compare to some big volume guys on here, however we do have some really unique and good selling points include:

We are a cost per sale supplement brand, so we have extremely low chargebacks. We have been using two merchant processors since day 1. The only reason we even have two is because one day I got really bored and decided to get another one as backup. (it is not even necessary)

We have over 300 autoship members and some members have been using our products for over a year, some two years. The average cycle people stay on our autoship program is about 4 cycles (some do 30 day autoship while others do 45 or 60 days, we customize them for our customers). This alone generates around 6.5k a month basically doing nothing. (People do come and go, but the number of people that joins our autoship goes up slowly)

The entire business is pretty much on auto pilot, the work required for this business is probably less than 4 hours a week. (Answering support emails & fine tuning ad campaigns and occasionally test new traffic sources & promotional methods.)

We developed a system that allows users to input feedbacks from a web form and we can validate the feedbacks and have the show up on the front end using an algorithm we developed

We have simple video SOPs on procedures such as how to FBA inventories to Amazon.com, Amazon.ca (You really just need a part time to do all the work including emails, my gf is the one doing all this not me)

There is a lot more other stuff that's not listed here (autoresponder for both official site & Amazon, media channels and etc)

This supplement brand has a lot of potentials to go higher for sure, I am just not really pushing it hard enough.

Now, back to my question, what's the right asking price if I am looking to sell off my business?

Thanks.
 


You do say $15k/month profit, so multiply by 12 months, and you're looking at around $180k.

Considering you're a white label supplement brand though, and also online operation vs. brick & mortar, you may want to knock the price down a little. Who knows though, you may get lucky and find someone who will drop $180k into it.
 
In my experience, once you start getting close to 20K+/month you're well into 2-3+ year multiples especially if there is 3-5 years of normalized sales within your vert. Other variables get taken into account to re scaling/replicating/new demos/regions/aff opps/etc vs being capped.

There are brokers out there that will take 10-15% if you let them try to sell it exclusively for 6 months to a year, they will position it best after you fill out a deep prospectus not much different than above just more detail and an appraisal against their other inventory.

You can check places for similar biz exits so you can have a loose comparison to yours like:
Search Businesses For Sale - BizBuySell.com

Flippa might even have some relative setups but your biz is bigger than most budgets there (I'd still list it there though for awareness if you're going to try to exit on your own).

Best of luck w/it - if I were you: If you don't get 400K to 500K+ for it - just automate it more with a well paid person(s) + give them incentive to grow it and ride it out.
 
What country are you from, and who would buy your company? A company in the industry or a fund? Regardless of your answers, there’s a whole bunch of reasons why you don’t want to sell using a multiple of net income (especially a 1x annual multiplier, because wtf is that about?). It doesn’t accurately reflect anything in this kind of business, and will just get your screwed over.

Take EBITDA (Net income and add back in depreciation, tax, interest expense), add back in any marketing expenses that are not on-going (things like SEO that you can’t individually attribute to individual transactions). Multiply that number by something more like 1.67-5x (20-60% discount rate). That’s your napkin value.

Also, +rep for ncmedia, he's bang on.
 
I feel like adding to this:

Things to consider - MAKE DAMN SURE you want to exit, especially if you are the least bit emotionally attached to this, or are blindly thinking you can replicate your success on your next project. Reason I say this is time and time again I see associates sell off extremely valuable assets only to regret it post not being able to thrive again for many years on new opps. You have a fukn amazing winner on your hands in my opinion.

If you do exit - do it through a broker. It's big money that scares most and a confident emotionally unnattached middleman focused on maximizing exit sale price (to max their commission too) makes it more comfy for you and for vetting/screening and most importantly closing the sale.

I used a broker on my biggest exit attempt, tried going for 1.2M and it didn't sell. I'm really glad it didn't today for my own reasons but at the time it was approx just over double yours re numbers/$. My second biggest exit I didn't use a broker, scary process - scary even having that money in my bank for the first x months just wondering what is going to happen and hoping markets don't change/goog doesn't change/they don't want to refund etc. and I had minimal paperwork - luckily all parties involved were good people and it was smooth but still stressful.

I'm very rarely impressed with a biz that's operated well and turns good profit for little time invested that is sustained for years and growing AND has lot's of room to grow/duplicate the setup/etc. - this is something I myself might even entertain if I found the time and had more insight on the niche.

It's kind of a consultants dream come true if you were to offer xx% to simply hand it off and let a creative confident person run with it - so having said that you should consider all your options before just letting this go in my humble opinion.

Doing the same thing for so long I get the jones to change it up/start a new path, however I also recognize now more than ever that established online properties are hard to build from scratch/test/master conversions/grow/dilute competitors/etc. and stay profitable for more than a quick spike, so I had to throw in a few more comments.

N.
 
ncmedia, thanks for all the great info. Is there a broker you recommend?

I am only going to sell it if I get a good offer, else I'll just let it sit and generate passive income. I'll look into other suggestions, really appreciated.

Smidge - I live in Taiwan, the company is registered in the US, but I have been operating it oversea for 4 years. I have only been back to the US once in 2012 and the only reason I went back was to go to ASW to hang out with yall wickedfire motherfuckers

Kiopa_Matt - you obviously have no idea what's going on, lol
 
Do not sell. You will regret it. Business nowadays is hyper competitive. And you have no way of knowing your next ventures will succeed even with the capital you have from the sale.
 
The place I used was: Website Brokers | Sell your Online Business | Websites for Sale

If you want a copy of my prospectus from the sale PM me and I'll dig it up, they did a great job on presentation and how they package your data for an easy overview. We had a few bites but my biz is extremely unique (music software) and we couldn't find a confident fit, plus I was firm on price so no lower offers were accepted.

N.
 
Kiopa_Matt said:
You do say $15k/month profit, so multiply by 12 months, and you're looking at around $180k.

Considering you're a white label supplement brand though, and also online operation vs. brick & mortar, you may want to knock the price down a little. Who knows though, you may get lucky and find someone who will drop $180k into it.
Click to expand...

where on earth did you pull 12 from? most valuations are lower
 
papajohn56 said:
where on earth did you pull 12 from? most valuations are lower
Click to expand...

What? Where on earth did you get that idea from? Maybe if all you're doing is building shitty little Adsense sites to flip on flippa where you might get a multiple of 3-6 months, but as ncmedia pointed out, 3-5 years would be a much more accurate valuation. Obviously a lot more should go into valuing a company than some arbitrary multiple of monthly income though, especially on a well established 6 year old business.

This is a pretty good article on some of the things that should be considered when valuing an online business...

How Do You Value A Website or Internet Business?
 
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