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Maybe selling my biz. How much would it be worth?

by avhow
15 replies
Hi,

So I have a business that is doing pretty good. Brings in about $1500 a month with very little work. I'm looking at going back to college and am thinking about selling so I'm wondering what it might be worth. If it's worth it, I may sell, otherwise the $1500 is still pretty good.

It's been running about 4 years. I basically sell a bunch of niche educational videos and templates. It's in a popular niche that is on the up and up... and it could easily be expanded with extra products etc.

In 2009 I made $17,000 selling them on DVD.
In 2010 I switched to digital downloads only and my take dropped to about $12,000.
In 2011 I updated my site and bundled my products and made $20,000

That figure is after my credit card processor fees but doesn't include my costs which are pretty low. For the accounting books I throw in every receipt I can find (computer equipment, magazines etc) but in reality my only costs are hosting and the 8% CC processor fee. And a $5.30 DVD if the customer pays the extra $19.95 for a backup DVD.

As for promo I advertise on Craigslist. I have about 15 ads running on there. I have a bunch of You Tube videos that pull in some traffic and I'm front page on Google for a few of my best keywords. I have an eBay page but get no sales from there. I think people follow my links back to the site and buy direct.

I used to use Google adwords but when I once polled my purchasers they all said they found me via natural search so I gave up.

In 2011 I got about 120-200 visitors a day, and over 200 sales for the year with 5 returns. My usual sale is $95 but if the customer also wants a backup disc I charge an extra $19.95 and ship a dvd via Kunaki.com for $5.30

I dont really put much time into the business and it could well be developed further. I could make lists of purchasers but have not bothered creating new products or marketing to my list.

I sort of lost interest in the niche and just let it tick over. I have a full time job, have another product I'm working on, and am studying to go back to college so time is at a premium.

You always hear different theories about how to value a business such as 7 times the yearly earnings etc (although is that realistic because if it is then great!). But I'm interested in what you warriors think, as to be honest, you guys would be among my target buyers.

Again I may just keep it, because $1500 a month is rent and bills. But a nice lump sum right now would be great...

I'm on the fence. What do you guys think? Is it worth me selling? And what might it be worth?

Thanks for your help

Adam
#biz #selling #worth
  • Profile picture of the author Frosy
    Mate if you have a business making $1500 a month with little work then you are mad selling it. Unless you want me to run it for you for 50% split

    Good luck!
    Dave
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  • Profile picture of the author Dimitris Skiadas
    Originally Posted by avhow View Post

    Hi,

    Again I may just keep it, because $1500 a month is rent and bills. But a nice lump sum right now would be great...

    I'm on the fence. What do you guys think? Is it worth me selling? And what might it be worth?

    Thanks for your help

    Adam
    I think that you have answered your own question Adam.If you do not have any clear project in your head or you don't want a big fund for any plan you might have, just keep it!

    Because i think it took you a while to manage and get it at this point!1500$ per month are what others might be dreaming a lot to accomplish!

    I would keep it though.

    Dimitris
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  • Profile picture of the author Ben Gordon
    You could probably sell a business that's making $1,500 continually for a few years for 12x - 15x its monthly profit. You'd be looking at around $18,000 - $22,500 for your business. However, I suggest you should keep it. Having easy income coming in without much effort is far more valuable than a year's worth of revenue. I would understand if it took a lot of care to maintain those rates, but at $1,500 per month without effort, I would suggest you definitely keep it and develop it overtime when you finish college. You already have an authority figure in your niche, don't lose it! It'll be much harder to start all over again, especially in the same niche as the buyer might ask you to sign a non-compete agreement.
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  • Profile picture of the author Borja Obeso
    i wouldn't sell it if i were you, unless you absolutely and urgently need that fat cash flow right now, otherwise keep it, 1500 is a complete leaving for some people so take advantage of it.
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  • Profile picture of the author StunningWarrior
    Originally Posted by avhow View Post


    You always hear different theories about how to value a business such as 7 times the yearly earnings etc (although is that realistic because if it is then great!). But I'm interested in what you warriors think, as to be honest, you guys would be among my target buyers.
    Seven times yearly earnings is for big businesses that supposedly have a long term future - this is actually BS but there you go. When you see PE house deals the usual thinking is that seven times yearly earnings is justified because the business will produce those earnings for the next seven years (well usually the expectation is to increase them) and that there will still be a business after seven years that is still producing earnings and hence can be sold. (The real story is vastly different - for my day job I work in this area and I've seen the utter c*** that is produced as a projection for the business in the future.)

    For your business you are looking at more like one times annual earnings I'm afraid (look at flippa.com for the types of multiples you can get). You might get a bit more if you can show how the buyer can increase earnings, particularly as you have a comparatively long track record.

    Unless you're really, really strapped for time I can't see any point in you selling your business.
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  • Profile picture of the author TCwarrior
    well done,
    It could be developed for sure and it also depends on the size of your current customer base IF ACTIVE, as in do you keep in touch with customers? are they active on your site/forum email list? An involved user base has its own value in the eyes of someone wanting to buy your business to expand on it for examlpe creating additional targeted products for exisitng customers.

    but if the business is just ticking over and mostly you have one off customers with zero contact after the purchase... then you probably won't get more than half year to one year yearly earning max

    Keep it or leave it is all down to your personal situation (only you know the details) but if you can keep it ticking over with very minimal work it may be worth keeping it. Also if your $1500 per month is mostly profit... why don't invest small chunks of it now and then to outsource production of updates/upsell-items... this way you won't need to do any work yourself, you won't be risking investing new money, you will take calculated risks with small amounts but you could double your earnings by selling again (updates, new videos) to your existing buyers
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  • Profile picture of the author Perestroika
    From what I've seen anywhere from 10-18 months of revenue depending on a type of online business this is.

    I agree with others sounds like its better to keep it.
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  • Profile picture of the author elasu13
    I Would keep it if i was you
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  • Profile picture of the author Hydraman
    Originally Posted by avhow View Post

    Hi,

    So I have a business that is doing pretty good. Brings in about $1500 a month with very little work. I'm looking at going back to college and am thinking about selling so I'm wondering what it might be worth. If it's worth it, I may sell, otherwise the $1500 is still pretty good.

    It's been running about 4 years. I basically sell a bunch of niche educational videos and templates. It's in a popular niche that is on the up and up... and it could easily be expanded with extra products etc.

    In 2009 I made $17,000 selling them on DVD.
    In 2010 I switched to digital downloads only and my take dropped to about $12,000.
    In 2011 I updated my site and bundled my products and made $20,000

    That figure is after my credit card processor fees but doesn't include my costs which are pretty low. For the accounting books I throw in every receipt I can find (computer equipment, magazines etc) but in reality my only costs are hosting and the 8% CC processor fee. And a $5.30 DVD if the customer pays the extra $19.95 for a backup DVD.

    As for promo I advertise on Craigslist. I have about 15 ads running on there. I have a bunch of You Tube videos that pull in some traffic and I'm front page on Google for a few of my best keywords. I have an eBay page but get no sales from there. I think people follow my links back to the site and buy direct.

    I used to use Google adwords but when I once polled my purchasers they all said they found me via natural search so I gave up.

    In 2011 I got about 120-200 visitors a day, and over 200 sales for the year with 5 returns. My usual sale is $95 but if the customer also wants a backup disc I charge an extra $19.95 and ship a dvd via Kunaki.com for $5.30

    I dont really put much time into the business and it could well be developed further. I could make lists of purchasers but have not bothered creating new products or marketing to my list.

    I sort of lost interest in the niche and just let it tick over. I have a full time job, have another product I'm working on, and am studying to go back to college so time is at a premium.

    You always hear different theories about how to value a business such as 7 times the yearly earnings etc (although is that realistic because if it is then great!). But I'm interested in what you warriors think, as to be honest, you guys would be among my target buyers.

    Again I may just keep it, because $1500 a month is rent and bills. But a nice lump sum right now would be great...

    I'm on the fence. What do you guys think? Is it worth me selling? And what might it be worth?

    Thanks for your help

    Adam
    The minimum price I would consider selling it for is $18,000 which is about one year's earning. However, $36,000, i,e two year's earnings should be a better price. Businesses are valued based on future discounted cashflow all the time
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  • Profile picture of the author Thomas Smale
    You're probably looking at around $30k. The site is clearly solid and has a nice history, so there will be a lot of buyers.

    The main issue I forsee is the traffic from CL ads - running 15 at a time means you'll need daily work to keep the site going, so it's not as passive as other opportunities.

    On the positive side, it does sound like it has room for growth, so you should find a buyer who is happy to pay 1.5x net earnings.
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  • Profile picture of the author Suraj Muralee
    I wouldn't sell the BUSINESS if I were you .
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  • Profile picture of the author massiveray
    I'm jumping on the don't sell it train.

    Do some work on it and raise that 1.5k to something you're more comfortable with.
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  • Profile picture of the author avhow
    Wow guys thanks for the responses. Some interesting comments. And yeah I see the majority lean in the direction of keep it and run with it... But then the $30k possibility keeps me on the fence.

    On one hand $30k would give me a nice bit of change to see me through college for a couple of years and I'd be comfortable. But on the other hand $1500 would pay rent and then continue after college...

    Cheers

    Adam
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    Dont know what happened. Used to have hundreds of posts on here. Left for a while - came back and everything gone... no-one answers my emails.... So guess I'll just start from scratch... :0(

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  • Profile picture of the author kamperman
    You could always list it on Flippa and put a bottom line price of what you consider the minimum that you would accept. They have what they term a "success fee" that the seller has to pay when successful, so be sure you understand the ins and outs. I've found that roughly 2-3000 people are on there at any given time, so you'd have exposure.
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  • Profile picture of the author Randall Magwood
    $1500 a month is some good dough. Is it really a hassle to maintain while you go back to college? Could you go back to selling digital products? I'd imagine that selling digital products are simple and easy to manage while you go on with your life. You could probably manage the whole business via an Android or iPhone.
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