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I'm considering selling my business, what should I think about?

by Sten M. Andersen
10 replies
I lay awake all night considering selling my internet based business. I have too much on my plate right now, and I this could be an option for me to get my head over the waters again.

But what should I be thinking about when preparing to sell?

For example, I'd want to sell the business, including my list of about 17,000 subscribers. But that list is at Aweber -- will they let me transfer the list to another person's account? And are there other ethical issues surrounding the inclusion of a list in such a sale?

I'd also be selling all my AdWords-keywords (a lot), and access to all the historical data on them. How much would such an asset be worth?

Pricing is of course also an issue. The business has broken even for about 5 years, while building the list. There are some good assets and a lot of potential here, but no profit as of today. I wouldn't be willing to sell for change -- but what IS a reasonable price?

I'm sure someone here has some experience in the matter.

Thanks.
#business #selling
  • Profile picture of the author pethanks
    You should of course consider and think who will be your target market. You should think also how are you going to promote your business.
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  • Profile picture of the author peter.max
    The fact that with that size list you just break even is a bit of a concern. You may have to look at a revenue multiple model rather than a profit model. You may want to consider talking to a business broker to maximize you value.
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    • Profile picture of the author Sten M. Andersen
      Hi Peter,

      Absolutely. When going on auto pilot, the business has been growing itself, just breaking even. I've been making a profit when emailing the list new offers, but I simply don't have the time to treat them they way I should.

      There's a lot of potential here in creating the right upsell / backend offers, and again, it boills down to time.

      Thanks for your input, though. Do you know of any business brokers that are reliable?
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  • Profile picture of the author DABK
    Make lots of offers to your list for a few months, show lots and consistent revenue for 6 months. You'll get a lot more money, people pay for results a lot more than they pay for the potential of results. And they consider the price in multiples of the revenue.

    Go to Flippa: The #1 Marketplace for Buying and Selling Websites, look at sold sites. I've heard that on flippa.com and such sites, the sales price is much lower than that of sites sold off-line. But you can see the relationship between revenue and sales price.
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    • Profile picture of the author John Bellamy
      I always value companies @ profit x 5. So if you company is making 50k profit a year it is worth 250k.

      JB
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      • Profile picture of the author Wesley Atkins
        Originally Posted by John Bellamy View Post

        I always value companies @ profit x 5. So if you company is making 50k profit a year it is worth 250k.

        JB
        John,

        Have you ever sold a website for that amount.

        I'm asking because I have been toying with the idea of selling my affiliate business that made $80k last year. I was under the impression that I could only get about 2 years income, which is why I have not sold it.

        However, if I could get x5 ($450,000) - then I would be serious considering offloading it. To be honest the site requires very little maintenance (1 hour per week) and all the traffic is from SEO. No paid traffic at all. So would never get rid of it for 2 years income.

        Do you think it would sell for x5 on Flippa?

        Any other thoughts from anyone?
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        • Profile picture of the author Matt.Lake
          Originally Posted by Wesley Atkins View Post

          .

          Do you think it would sell for x5 on Flippa?

          Any other thoughts from anyone?
          In all honesty, probably not on Flippa. Generally, most people on Flippa aren't willing to pay more than 2 years worth of profit as you hinted at, or more commonly 1 years worth. Generally.

          It wouldn't hurt though to put it on Flippa and see. You can set a reserve, and if you write a really good auction listing i.e. sales page, then you may well be able to find the serious buyers.
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        • Profile picture of the author DABK
          On Flippa.com it's very unlikely you'll sell it at 5 x the revenue for a year. From what I've seen it's 2x or so. Offline businesses sell usually for 3 to 5x (info from my accountant who's been doing business accounting and taxes for over 30 years.

          So, once you get the revenue going, you should market it to non-internet business owners.


          Originally Posted by Wesley Atkins View Post

          John,

          Have you ever sold a website for that amount.

          I'm asking because I have been toying with the idea of selling my affiliate business that made $80k last year. I was under the impression that I could only get about 2 years income, which is why I have not sold it.

          However, if I could get x5 ($450,000) - then I would be serious considering offloading it. To be honest the site requires very little maintenance (1 hour per week) and all the traffic is from SEO. No paid traffic at all. So would never get rid of it for 2 years income.

          Do you think it would sell for x5 on Flippa?

          Any other thoughts from anyone?
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          • Profile picture of the author Flipfilter
            Originally Posted by DABK View Post

            On Flippa.com it's very unlikely you'll sell it at 5 x the revenue for a year. From what I've seen it's 2x or so. Offline businesses sell usually for 3 to 5x (info from my accountant who's been doing business accounting and taxes for over 30 years.
            Whilst I have a rule of never taking advice from accountants or bank managers your accountant is generally correct.

            Here's the online business stats from our data engine:

            The average online business with a yearly revenue less than $60K tends to sell for 7.2x MONTHLY revenue which I guess is 0.6X annual revenue. Factors that increase this figure include
            • Evergreen niches with strong organic rankings
            • Aged domains with PR and top level extentions
            • Monetisation through adsense only
            • If the site is a web application, drop ship ecommerce or membership site
            • A mailing list / database being sold with it
            • If the site owns its own product
            (more figures here http://www.flipfilter.com/statistics-figures.php)

            Businesses above $60K per year tend to average 2.7x yearly profit, especially when being sold with the aid of a broker.

            The truth is without profit, especially over five years, you'll struggle to sell a web business. The whole idea behind online ventures is that they typically have lower capital investments (no buildings or machinery) and hence, will often go into profitability much sooner.

            If your revenues are sufficient, you're best bet would probably be a broker who may already have a client in your space, that would buy the site knowing how to best monetise it. Here's two recommendations

            Quiet Light Brokerage

            Buy Internet, Technology, Software, Website Business

            Hope this helps

            Justin
            Signature
            Latest Post on FlipFilter.com "Buying and Selling Mobile App Businesses - An Interview with Eric Owens'"
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  • Profile picture of the author Richard Tunnah
    Sten,
    Your biggest problem may be what did your list sign up for? I mean if they gave you the details on the understanding you'd never rent or sell their details then you're gonna be in trouble by selling the list. Also I can't understand why anyone would want to sell a 17,000 list.
    I've sold online businesses before and like everything the value you get will depend on the buyers wanting it but generally buyers will look at how many years you have run a profitable business. Now as you say it's breaking even then the value to any buyer will be minimum as you are basically offering to sell a business that makes no profit!

    Rich
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