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How do I value my business- what should be the asking price??

by Forexmonster
23 replies
I own a website in the futures trading/ strategy niche that I'm looking to sell. Products are built for the popular NinjaTrader platform and price range for the products go from $20 all the way up to $6K. Launched it in June 2014, first sale was in August of 2014, since then it has generated a little over 22k in profit with only about $50 total for expenses (domain + hosting). Have done no paid advertising of any kind, all advertising was done with YouTube videos and Twitter. Also partnered with NinjaTrader Brokerage and their data feed provider, so I get traffic from there too.
The only work that needs to be done is answer emails every once in a while and update product performance stats every so often.

I valued the business at around 40-50k based on the profit I made, had some interested buyers but haven't sold it yet, kept getting low balled. My question is what should I be realistically asking for the business? Site is atsfutures.com
#business #price
  • Profile picture of the author wealthy20
    Originally Posted by Forexmonster View Post

    I own a website in the futures trading/ strategy niche that I'm looking to sell. Products are built for the popular NinjaTrader platform and price range for the products go from $20 all the way up to $6K. Launched it in June 2014, first sale was in August of 2014, since then it has generated a little over 22k in profit with only about $50 total for expenses (domain + hosting). Have done no paid advertising of any kind, all advertising was done with YouTube videos and Twitter. Also partnered with NinjaTrader Brokerage and their data feed provider, so I get traffic from there too.
    The only work that needs to be done is answer emails every once in a while and update product performance stats every so often.

    I valued the business at around 40-50k based on the profit I made, had some interested buyers but haven't sold it yet, kept getting low balled. My question is what should I be realistically asking for the business? Site is atsfutures.com
    As a general rule of thumb, when purchasing a business (or in your case a site), you give the buyer a top-down view of what he would earn in 1 year of owning the business based on last year's earnings, and that is the normal going rate or expected value for your biz.
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    • Profile picture of the author wealthy20
      In fact I am currently involved in the purchasing of an old site (circa 2007). It used to make the owner 40k+ a year, but now it has dribbled down to around $5k a year.

      At first he expected a figure of around ~40k when he showed me the stats and gave me access to the backend, but that wouldn't make any sense.

      I am buying at this point in time, so my expected return on my investement would take me 8 years to make that money if i just buy the site as is.

      So, to make long story short, he finally saw my point and eventually sold for $5k. The price of what it's making right now in a year. Now I can expect to be in profit after 1 year+.

      Which is normal for any business. Usually first year you're turning a loss, 2nd year you break even, third year you're in the money.
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      • Profile picture of the author Forexmonster
        Originally Posted by wealthy20 View Post

        In fact I am currently involved in the purchasing of an old site (circa 2007). It used to make the owner 40k+ a year, but now it has dribbled down to around $5k a year.

        At first he expected a figure of around ~40k when he showed me the stats and gave me access to the backend, but that wouldn't make any sense.

        I am buying at this point in time, so my expected return on my investement would take me 8 years to make that money if i just buy the site as is.

        So, to make long story short, he finally saw my point and eventually sold for $5k. The price of what it's making right now in a year. Now I can expect to be in profit after 1 year+.

        Which is normal for any business. Usually first year you're turning a loss, 2nd year you break even, third year you're in the money.
        Makes sense, Ive only been in business for a year so my revenue is current. Thanks for the reply
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      • Profile picture of the author jasondinner
        Originally Posted by wealthy20 View Post

        In fact I am currently involved in the purchasing of an old site (circa 2007). It used to make the owner 40k+ a year, but now it has dribbled down to around $5k a year.

        At first he expected a figure of around ~40k when he showed me the stats and gave me access to the backend, but that wouldn't make any sense.

        I am buying at this point in time, so my expected return on my investement would take me 8 years to make that money if i just buy the site as is.

        So, to make long story short, he finally saw my point and eventually sold for $5k. The price of what it's making right now in a year. Now I can expect to be in profit after 1 year+.

        Which is normal for any business. Usually first year you're turning a loss, 2nd year you break even, third year you're in the money.
        Just had a similar thing happen.

        Wanted to acquire an info product business from someone and they netted $500 in the last year.

        So I made a very fair offer based on that fact.

        The guy came back and was talking all of this "potential" bs and wanted $15K for it.

        I told him it would take me 30 years the way the site currently stands and he just didnt get it. Kept talking about potential to dominate the niche and that he had a VSL produced by a proven VSL copywriter - but with no data on that either.

        Some of these product owners get way too emotionally invested and delusional - which makes it suck to negotiate with them.
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        • Profile picture of the author wealthy20
          Originally Posted by jasondinner View Post

          Just had a similar thing happen.

          Wanted to acquire an info product business from someone and they netted $500 in the last year.

          So I made a very fair offer based on that fact.

          The guy came back and was talking all of this "potential" bs and wanted $15K for it.

          I told him it would take me 30 years the way the site currently stands and he just didnt get it. Kept talking about potential to dominate the niche and that he had a VSL produced by a proven VSL copywriter - but with no data on that either.

          Some of these product owners get way too emotionally invested and delusional - which makes it suck to negotiate with them.
          Yes, but listen to me for a second. I always try to think not just from my perspective only, but I try my best to fit myself in the other guy's shoes and see what he's seeing from his side of the table.

          Domain owners/Business owners ALWAYS value their domains/biz as if it were some holy grail right? especially if it was hot at some point in time. It's theirs, so it's the best, right?

          Some are aggressive about it, others are mellow...You find both extremes.

          For your own consideration: I'm gonna make a disgusting analogy, so if you're queasy look away now:

          It's like when Freud said "When I look back into the loo after taking a shi*, I like the smell of my own shi*, but other people find it disgusting for some reason."

          I'll leave the rest to your own imagination.
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          • Profile picture of the author BigFrank
            Banned
            There is one firm truth in selling any business. It is not worth one penny more than someone is willing to pay for it, regardless of what you value it at.

            Cheers. - Frank
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            • Profile picture of the author Forexmonster
              Originally Posted by BigFrank View Post

              There is one firm truth in selling any business. It is not worth one penny more than someone is willing to pay for it, regardless of what you value it at.

              Cheers. - Frank
              Totally agree with that
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    • Profile picture of the author DIABL0
      Originally Posted by wealthy20 View Post

      As a general rule of thumb, when purchasing a business (or in your case a site), you give the purchaser a top-down view of what he would earn in 1 year of owning the business based on last year's earnings, and that is the normal going rate or expected value for your biz.
      In addition I would subtract any labor cost to have someone manage the business, with out covering labor, then someone is just buying a job.
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  • Profile picture of the author Highway55
    How much does the site generate monthly? Can you prove it? If you can, then the price you can expect is 10 times your monthly gross.
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    • Profile picture of the author Forexmonster
      Originally Posted by Highway55 View Post

      How much does the site generate monthly? Can you prove it? If you can, then the price you can expect is 10 times your monthly gross.
      Yeah I did payment processing through Amazon simple pay and can show proof of transactions.
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  • Profile picture of the author Jason Kanigan
    Originally Posted by Forexmonster View Post

    I own a website in the futures trading/ strategy niche that I'm looking to sell. Products are built for the popular NinjaTrader platform and price range for the products go from $20 all the way up to $6K. Launched it in June 2014, first sale was in August of 2014, since then it has generated a little over 22k in profit with only about $50 total for expenses (domain + hosting). Have done no paid advertising of any kind, all advertising was done with YouTube videos and Twitter. Also partnered with NinjaTrader Brokerage and their data feed provider, so I get traffic from there too.
    The only work that needs to be done is answer emails every once in a while and update product performance stats every so often.

    I valued the business at around 40-50k based on the profit I made, had some interested buyers but haven't sold it yet, kept getting low balled. My question is what should I be realistically asking for the business? Site is atsfutures.com
    If your site has real cash flow, contact Jock Purtle at DigitalExits.

    You need someone with accounting skills, but not just any old accountant because they have to understand internet valuation. That is not a topic most are familiar with.

    I interviewed Jock here.
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  • Profile picture of the author jazbo
    There is always the problem of proof!
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  • Profile picture of the author TroyCo
    The value of a site is 10 month revenue on the low end and 24 months revenue on the high end.

    if people are getting into a bidding war for your site you can expect around 24 months revenue tops

    and dont settle for less that 10 months because that is the lowest someone should be buying it for.
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    • Profile picture of the author Forexmonster
      Originally Posted by TroyCo View Post

      The value of a site is 10 month revenue on the low end and 24 months revenue on the high end.

      if people are getting into a bidding war for your site you can expect around 24 months revenue tops

      and dont settle for less that 10 months because that is the lowest someone should be buying it for.
      Thanks for the reply, good to know that.
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  • Profile picture of the author agmccall
    monthly income x 36 up to 60, basically 3 to 5 years of sales.

    That is how I would price mine

    al
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  • Profile picture of the author totalprocessing.net
    10x annual revenues
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  • Profile picture of the author jasondinner
    Originally Posted by Forexmonster View Post

    Have done no paid advertising of any kind,
    Why not invest your profits into paid advertising so you can scale this up and make so much money you'd be an idiot to let someone take it from you?
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    • Profile picture of the author Forexmonster
      Originally Posted by jasondinner View Post

      Why not invest your profits into paid advertising so you can scale this up and make so much money you'd be an idiot to let someone take it from you?
      Thats part of the reason why I'm selling it, I didn't re-invest and now I don't have the cash to do it. Lesson learned
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  • Profile picture of the author luke4
    Your business is NOT worth the REVENUE times the months or years, it's net profit. Someone above put "10x annual revenues", this is severely incorrect.

    1. It's normally 10-24 MONTHS, not years.
    2. It's net profit, NOT revenue.

    If the site was turning over $500,000 a year, but only netting $50,000 a year profit, why on earth would i pay $5,000,000 for it!?

    A lot of people in this thread are getting revenue and net profit mixed up...

    Luke.
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    • Profile picture of the author Forexmonster
      Originally Posted by luke4 View Post

      Your business is NOT worth the REVENUE times the months or years, it's net profit. Someone above put "10x annual revenues", this is severely incorrect.

      1. It's normally 10-24 MONTHS, not years.
      2. It's net profit, NOT revenue.

      If the site was turning over $500,000 a year, but only netting $50,000 a year profit, why on earth would i pay $5,000,000 for it!?

      A lot of people in this thread are getting revenue and net profit mixed up...

      Luke.
      Yeah you are correct. Net profit
      Profit was 22k
      Total costs since launch are around $50-60
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