Whats this site worth?

jonpoh · #1 (**permalink**) 12-01-2005, 08:46 PM

I own a 6 yr old web business, no store only web and phone orders. We mostly sell wood and deck supplies. The site gets 100k visits a year and generates about $40k in sales and about $15k in bottom line profit. We ahve great SE position for our target keywords. Anyone got any idea what that business would be worth. I have a number in mind but dont want to lead the discussion. Its a simple business, no cold calling, no recievables, very regular biz. Let me know what you think.

MichelH · #2 (**permalink**) 12-07-2005, 08:47 AM

I would say 20 times the net profit, so that should be around 300k.

Feydakin · #3 (**permalink**) 12-07-2005, 10:43 AM

20x net based on what statistics?? I realize that this is a 'web' business and should be inflated way beyond it's true value, but every stat I've seen for construction material (read lumber companies) companies is far closer to 2x to 3x net or .5x gross..

ADAM Web Design · #4 (**permalink**) 12-07-2005, 11:28 AM

I'm with Feydakin. 20x net is way too much.

Personally, I'm inclined to believe in the $30,000-$45,000 range. There are some issues with the cart that the new owner would have to address.

kgun · #5 (**permalink**) 12-07-2005, 06:01 PM

I own a 6 yr old web business, no store only web and phone orders. We mostly sell wood and deck supplies. The site gets 100k visits a year and generates about $40k in sales and about $15k in bottom line profit.

If we discount net profit by zero real interest rate and use a 10 years horizon, I mean 150 000 is a realistic estimate. The business stood through 2000, so let us multiply the horizon by 20 and we get 300 000.

Get a carismatic CEO and you may soon multiply the last estimate by 10. Is it possible to reduce costs without reducing income?

Q.E.D.

MichelH · #6 (**permalink**) 12-08-2005, 03:10 AM

You guys tend to forget that the big boys (Ebay, Google etc.) usually pay far more than 20 times the net profit. If you take over a profitable business and want to use that business to your advantage, that is the kind of amounts you are talking about. You make it sound like it is a short term deal and you just want to play around with the business model a bit. If you are serious about selling your business, 20 net profit is not too much to ask.

dburdon · #7 (**permalink**) 12-09-2005, 04:40 PM

You can only value a "business" after you've taken out a value for the cost of management.

A business that makes less than say $50,000 before management is not a business. Its a job.

kerer99 · #8 (**permalink**) 01-09-2006, 04:15 PM

Robert Kiyosaki says 10x annual earnings.

I think a better answer is, whatever you can get for it. If you know of a buyer who is willing to pay 20x earnings, then great! That being said, you might not be able to find a buyer who will pay for 2x annual earnings.

Test the waters and try to find out what your potential buyers would be willing to pay.