How do I value an internet business?

7 replies
I have a website content creation business. My website is at:

Article Trader

I will not divulge what I make from this suffice to say its reasonable! My question is how do I actually value this business? Can I assume a multiple of monthly earning? Or is it more complicated than this?
#business #internet
  • Profile picture of the author cashcow
    I think you have to take into consideration how much time you spend getting the site to make money. It sounds like something that is not passive but requires a lot of hands on work.

    Do you write the articles yourself? Do you have writers? Would the new owner get the writers too as part of the deal? Would the absense of you writing the articles (if you write them) affect the output and, therefore, the bottom line?

    I think maybe all those things might affect the price.

    Lee
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  • Profile picture of the author colinph970
    Thanks Lee

    I don't do much of the writing these days, nearly all is done by sub-contract writers, all native English speakers. So its mainly customer management and sending emails.
    The new owner would get contact details of all writers and all customers.
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    • Profile picture of the author billmcintosh
      I buy a lot of sites. When I buy a site I try to buy for 10 months profit or less.

      If the site has added benefits like a really great product, some kind of intellectual property, exclusive rights to something valuable, a special marketing technique not used broadly, trained employees that come with the business or similar thing... then I MIGHT pay more.

      Hope that helps you a little.

      And I almost forgot... there are many other things about a site that would make me pay less too. Things like declining traffic or earnings, broken functionality, PLR or duplicate content or non exclusive rights to the scripts or product to name a few.
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  • Profile picture of the author duncanb
    As someone who has bought and sold several sites i can tell you that if you can as the vendor highlight some sort of USP the site has over its competitors then you can sell that site for even larger multiples of monthly earnings....

    This higher price based on the prediction of future potential earnings....but as i said this applys only if you can highlight a significant uniquness about you site.
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  • Profile picture of the author ramprof
    Most service businesses are valued based on cash flow and it really depends on the industry. Some service businesses, like accountants, have a high rate of return clients and are therefore more highly valued. Think about it this way - if somebody purchased the business right now how much cash flow would they be guaranteed based on current clients?

    Also, how easy would it be for somebody to enter this market? Seems pretty easy.

    If you do not have a steady stream of repeat customers then your multiple is likely to be low (probably somewhere around 3-6 months cash flow).
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  • Profile picture of the author mbacak
    Talk to my buddy. Justin Brooke.

    Tell him Matt Bacak sent ya.

    Justin Brooke | Facebook
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